As for why things are often technologically stagnant in fantasy settings, it oocrred to me that there's actually a good explanation built into a lot of fantasy roleplaying games quite by accident.
Well, the more explicit explanation is that the planets in question are
deathworlds, and every attempt to develop arcanoindustry blows up, gets eaten, and then sinks into a swamp that wasn't there until the entire area went up in a thano-thaumaturgical localized apocalypse. And then the swamp gets up and lays waste to a country or two in a necromantic rampage. People keep trying to advance, and all it gets them is maintaining the status quo because things keep eating the researchers. And the libraries. And the machines. And the surrounding countryside. So they keep having to rebuild the theoretical castle before the swamp decides to stand up and kick it over, then lay down on top of it, smother the lot, and proceed to self-immolate and go on to kill a few tens of thousands of unsuspecting civilians. There's generally no "And the third time, it stayed up!" in these settings, heh.
There's definitely a lot of interesting settings that try the whole integration thing, though. That one that's WWI with dragons, ferex... though trying to remember what it's called, it turns out there's apparently more than one fantasy series that's... basically that. Huh. The Temeraire series, that think I've never read anything from, and... I might have been thinking of Turtledove's Darkness stuff instead, which was a WWI
I alt-history that was pretty explicitly a re-imaging as to what might happen if there was an arcane revolution instead of an industrial one.
... but yeah, the whole "What would happen" thing depends mostly on what the magical system itself is like. The drawbacks, limitations, and limiting third parties (species that might not
want things to get fancy -- the proverbial idea that can't be killed becomes a lot more killable when you have individuals that can burn down the countryside on their own and literally mindwipe anyone they
don't kill) all determine exactly what could happen. Definitely wouldn't mind seeing more magitek settings out there, though. Especially ones that are explicitly magic, instead of just unexplained
space magic superscience :V