I am so very sorry that you have experienced this heartbreak; MANY of us know and understand how you are feeling, because we have been there, too.
I would imagine you are correct in your perception that the foal was likely a dwarf. A pronounced underbite at birth is one definite indicator,and although all miniature newborns have pretty domed foreheads, this one's does look even more so. Especially with newborns, and not seeing how they appear 'up and moving', I believe that some dwarves are not immediately recognizable as such, especially when you have not closely studied the possible manifestations, and/or seen one before. My own vet, a kind and knowledgeble man, did not even recognize the dwarf born here as such; he was in attendance at her birth, and she was brachyocephalic-the kind usually more immediately recognizable...also, some manifestations seem to become more recognizable as they get a bit older. Any loss is a painful loss; but in some ways, it may well be that this was nature's way of offering a correction. Worst is that youngsters, who are too young to really understand, are hurt when this kind of thing happens. However, it IS a part of life, and you are clearly telling them what must be said....Sincere condolences, to you all.
Margo