Many people (who don't actually study language or the evolution thereof) jump to a Prescriptivist viewpoint at first. Dictionaries follow actual English usage, not the other way around (Descriptivist).
I can't fault you; in order to teach English a prescriptivist mindset naturally has to be applied. So we teach Standard English's rules.
However, go compare various English style guides and tell me if they are the same.
Dwarves & Octopi are correct, because that's what people use. If octopedes was used instead, it would be correct and it wouldn't have a red squiggly line.