A state of nirvana would then be "falling out of the world" mentally. The dwarf in question is so happy he suddenly flips to walking around and doing nothing, enjoying the experience. The state is a "mental lock" and the dwarf would be completely ignorant of his surroundings until he is forced out of it. No deaths of pets or relatives, no morbid sights throughout the halls or status changes would affect him in the state. Hunger and thirst would probably factor in, briefly taking the dwarf out of the state to get nutrition, but the happy thought from the food would switch him back.
Since a state of "complete and utter happiness" is, naturally, very enjoyable, no one would willingly leave it, and would like to return once taken out of it. (Anyone watched the Star Trek movie "Generations"? That sort of thing.)
The state isn't "contagious", as in an ultrahappy dwarf won't radiate happiness or something, but since "happiness" usually happens on the overall, rather than individual scale, then one dwarf flipping should be a sign to the player that something's not right - or, rather, too right. Things like getting ultra-great drinks and foods in a personal legendary dining room could cause it, just as weed would if it were implemented.
There's a bigger danger to this "nirvana". Once taken out of it, forcibly, the dwarf gets a negative thought that prevents him from quickly re-entering. However, if a dwarf that's been in the state gets too much of a mood drop (which depends on what he sees after he's out of the non-interactive state - which in turn depends on what measures you resorted to beforehand), he can become miserable. Or berserk.
I suppose it could be fun. Economic simulation games like Stronghold (I think) actually suggest that the player be at least somewhat strict to his followers, to instill fear and whatnot, preventing possible unwanted behavior. Granted, those games usually have a certain tangible leader figure that represents the player, but I suppose this interpretation of the principle can be fun to play with in DF.