Whatever workshop you're using to encrust with gems, or decorate with bone, or decorate with cloth, whatever, you need to place it away from other things and place a stockpile right next to it that will attract the type of items you want. Nowadays you can even set what quality of items you want in a stockpile, so you could for instance ensure that only masterwork steel crossbows get decorated, or only Exceptional or better skull totems.
That eliminates the issue 90% of the time, in my opinion.
Setting a source stockpile next to the shop can help determine what gets used to decorate with, it would even be possible to make a stack that only holds masterful-quality cloth (or cut gems) next to your 'decorating' clothier (or jeweler) workshop, and all the other cloth (or gems) in another pile next to your other shop that doesn't do decorations.
One limitation I see right now is that you can't directly choose what type of creature's bones get placed in a refuse pile, so if you want to place a craftsdwarf shop and decorate all your masterwork armor and weapons with goblin bones, it's pretty tough to do... Unless ahead of time you have a refuse pile that only accepts Goblin corpses, and make sure there's no place for the bones to go when they rot so they stay right there and are the nearby craftshop's first choice for decorating materials.
So my question is, what would this resolve that can't be solved by planning?
There is the fact you can't choose the topic of engravings or decorations, but I'll talk about that in another thread because I don't want to hijack this one.
[ February 19, 2008: Message edited by: Stromko ]