Interesting topic.
I'm of the same opinion of CmdrCorsiken here. My take on it is that the way the Darokin Tunnel is described it could be something akin to the "Underground Railroad" of the USA. The Underground Railroad was neither underground (in the literal sense) or a railroad, it was rather an informal network of like-minded individuals who used secret routes and safe-houses to aid runaway slaves in reaching the Free States in the north and the Canadas.
With this in mind, the Darokin Tunnel could be more of a series of interconnected natural and man(or rather dwarf)-made paths consisting of valleys, passes, caves, tubes, and at times even tunnels. The "way" would only be known to those who have walked it before and the knowledge would be passed along by guiding others. Mapping it would be considered sacrilege as the dwarves would not want this information to fall into the wrong hands. There could even be a society of dwarves who act as guardians; maintaining the routes, providing shelter, and acting as guides and defenders of the "tunnel". The peoples of Darokin & Alfheim, at a loss for how the dwarves were passing, created the legend of the "Tunnel". The dwarves have decided to let the name stick as both a badge of honor and also as a means of disinformation; for if other countries think the dwarves to be advanced enough to bore straight through the mountains, then why couldn't they dig holes right up under their cities (much like the legends and fears, based somewhat on truth, that Americans had in the past of Chinese, Vietnamese, and other Asians digging tunnels beneath them with ill intent).
All warfare is based on deception. -- Sun Tzu