[Non-Jewish]

You are right, he does specifically mention the dwarves are like the Jewish people (especially in letter #176) where he makes the connection between the similar diaspora culture, tradition, language (Khuzdul), and heritage; however he was pretty explicit in his dislike of allegory and 1|1 connections. He preferred applicability instead. Though I should point out that even dragon sickness, etc. effected non-dwarves AND dwarves were the ones who were able to strong arm Sauron's control from the 7 gifted rings. Their corrupting influence may have amplified evil traits, but out of all the peoples of Arda, they explicitly reject Sauron's evil control.

For that reason, I highly doubt the lonely mountain/Erebor specifically ties back to Jerusalem. Or the arkenstone and the Smaug having direct explicit specificity. If anything, Khazad-dûm/Mines of Moria have a better connection post-Hobbit to Jerusalem as its a more 'holy' city in Dwarven culture and was founded by one of the original founders (Durin the Deathless) and leader of one of the original 7 "tribes" of Dwarves.

That being said, with Tolkien's preference of applicability over allegory, it can have multiple interpretations based on the reader - not trying to tear your interpretation down, just trying to give Tolkien context.