I'm very impressed by you're detective work, sir, and you get my certified thumbs up. In one of the original tellings of the snow white myth (which didn't contain any dwarves), Snow White's mouth was smeared by blood by the queen as an attempt to frame her for eating her own children (this connects us with that brilliant 'eating newborn's heads' thread). Could this be the connection with the infamous 'Glasgow smile'?
Secondly, there's a bit in the early tellings I think you may find interesting; "The huntsman took Snow White into the forest, but found himself unable to kill the girl. Instead, he let her go, and brought the queen the heart of a young deer or a pig." Remember the decoy?
Thirdly, of the seven dwarves of the later versions, could they be representive of the ill's that are plagueing Gotham?
Theorising is fun, but chances are the symbolism was unintentional.
EDIT: Maybe the coffin is Arkham. The witch Crane? Comparing the Joker to a woman who's always being kissed, or in some versions, raped, is getting sort of ridiculous.