How did he react? Turns out that even though I got the Morrigan bugged romance dialogue, it was limited to that one conversation (where she hands the letter over). I never saw the kid or anything like that.
I don't remember exactly what it was (I looked on youtube and didn't find a dwarf talking to her yet), but it was something along the lines of giggling/smiling/being amused that the inquisitor was a dwarf. It wasn't mean, just a kid being a kid. But what was weird was that dwarves (especially a dwarven man) shouldn't be a source of amusement at this point, if his dad (who Morrigan said helped him raise him) was a dwarf.
I suppose it doesn't surprise me much ultimately, there were a lot of cases where phrasing was awkward if you're a dwarf (imagine the same for the other non-human races). I have half expected/wanted that Varric/Dagna/Inquisitor/Dwarven characters used "we" or "us" when discussing dwarves together.