No, the dictionary defines a gnome as "a legendary dwarfish creature supposed to guard the earth's treasures underground". You're using a variant definition. Gnomes as commonly understood are mythical (i.e. not real) creatures. I've never heard anyone be offended by "GNOME". You can't just make up offensiveness where none actually exists.

Contrast with the word "midget", which does refer to real people and is offensive, and would be a bad name for a software project. Same for "gimp".