Already specified that we're looking at several tens of thousands of Dwarf settlers as things stand now, let alone the Halflings so- while that is technically true that also places it at a decent size for a medieval city on it's lonesome. And like hell the Dwarfs won't be willing to drop everything to prevent the fall of Eight Peaks a second time. The time thing I'm ambivalent on considering this quest has already covered a decade and could quite easily work some year long turns or minor time-skips into things. We're a wizard, now that we're a Magister, time isn't one of our major worries, especially because I'd be utterly shocked if the thread doesn't eventually want to try and pull an Elspeth or Gelt and become an immortal being of Ulgu. *
As for Zhufbar versus Eight Peaks? A few reasons, one I'd actually like to get a bit of distance from the Empire in our little hideaway here, because we're liable to be researching/storing things that would get us executed here and the distance is absolutely trivial for us and vast for a large force or pretty much anyone but another Wizard. Second of all, by the end of this we're going to have a personal rapport with Belegar and the other Dwarfs settling Eight Peaks- it's both narratively more satisfying given how much time and updates will be invested in helping this Karak, and a much more personal loyalty to us than for the most part Dwarfish reputation. This is to say nothing of the fact it's vastly easier to hide the fact this is where we're going as opposed to somewhere simply in the Borderlands or Tilea/Estalia than it would be to hide setting up a wizard tower/base of operation on the outskirts of Zhufbar. We retain more anonymity in addition to fixed defenses and trustworthy allies.
*We might actually even have a decent shot at it in the long run given she knows from Weber's Box that the winds theoretically can have a material form in the material plane, and her matrix is all about safely tying spell structures and the Winds to organic beings over the long term- though being an activated bound spell rather than a lattice to support and help replace our physical makeup with pure Ulgu.