Very good mystery. You have me intrigued. Unfortunately I cannot shed any light on this. I have spent an hour or so searching every way I can think of. It just makes no sense. I'm sure you noticed but the 1940 census shows the Dier family in Louisville, Ky in 1935.
There obvious has to be a mistake here, but I have no idea what it is. It can't be a transcription error, as the original census document is shown.
I even did a search with just Elizabeth and all the kids using just the first name in case she was married before. No luck.
I'll keep looking. Let me know if you learn anything.