I noticed that in the older games, they depict Dwemer to look vaguely like a cross between Falmer and Dunmer. Any coincidence or maybe since Falmer inhabit Dwemer Ruins, they could perhaps be the descendants of Dwemer??

I haven't found any literature to prove or disprove this theory.

Have you found any literature at all?

The Dwemer look nothing like the Falmer, they're just bearded elves with funny clothes. And their bodies all burned up.

And the Falmer are refugees who the Dwemer turned into slaves.

Falmer is the aldmeri name for the snow elves. They are not connected to the dwemer other than both being mer, or elves.

lol i swear i was thinking the exact same thing, and this comment made me laugh so hard

Where did they ever depict the Dwemer as looking like a cross between Falmer, & Dunmer?
The only "Dwemer" you see are Yagrum Bargrum, & he's a giant bloated mass, on spider legs. And the ghosts, & they're like three foot tall with greyish skin, & giant [censored] off beards?
Where as the Dunmer are just elves, but grayish-blue with red eyes, & boney foreheads.

The Falmer are most assuredly not the descendants of the Dwemer. They are the Falmer. They are what's left of the Snow Elves, not what's left of the Deep Elves.

The ghosts are normal height. Go check.

There are also a smattering of statues and illustrations of Dwemer.

No comment. Just go learn more lore. Wait that was a comment

the falmers where not even in the dwemer races they just go deep because of the nords invasion

http://www.uesp.net/wiki/Skyrim:Battle_of_Red_Mountain
http://www.uesp.net/wiki/Lore:Dwarves_%28book%29
http://www.uesp.net/wiki/Lore:Dwemer_Inquiries

http://www.uesp.net/wiki/Lore:The_Falmer:_A_Study
http://www.uesp.net/wiki/Lore:Fall_of_the_Snow_Prince

These in-game books can teach you more about the Falmer, and Dwemer.
Enjoy