Is it worth the effort to kill all the duergar?? I imagine some of them would have pretty decent armor and weapons. :evil:

I always kill them all. You can pick up a better version of Doom bolter if I remember correctly. Even if you don't kill them, they come back and stab you in the back anyways once you try to leave the monastery, so a preemptive strike is not only beneficial, but warranted.

For maximum experience, do all the duergar quests first (accept but don't kill the monks). Do all of the monk quests. Kill all of the monks. Get the reward for killing the monks. Kill the duergar. Kill the remnant duergar that ambush you as you leave the monastery.