I was thinking about this a while ago.
Here's what I propose:
Players should be able to micromanage as much as they want to, down to the level of controlling engravings and decorations with a screen that combines legends mode with the stockpile options.
But dwarves' psychology should be involved.
Test case 1: I let my engraver engrave according to his own sense of creativity when he's doing most of my fort. But when I'm doing my military tombs, I commission very specific engravings of each soldier's achievements in battle, and when I do the baron's room, I want a cautionary mural with engravings depicting the previous baron mandating crystal glass and subsequently being drowned. The engraver should easily oblige.
Test case 2: I micromanage the exact engravings for the whole fort. The engraver should suffer a cumulative effect, somewhat like sobriety, where he gets unhappy thoughts, works slower, perhaps engraves at a lower quality, and takes more breaks.
Test case 3: After several dwarves die in a carp-related accident, I order the now-unhappy engraver to engrave a bunch of squares. Already on edge because of his friends' deaths, my arbitrary orders are simply the last straw! The engraver throws a tantrum on the spot. Perhaps he stalks off and starts engraving depictions of violence on random available surfaces.
These effects should be modified by personality; dwarves with high IMAGINATION, ARTISTIC_INTEREST, or LIBERALISM don't like being micromanaged at all, whereas dwarves with high DUTIFULNESS, TRUST, or COOPERATION might let you do much more.
It could also work with dwarves' preferences, where an artist might be overjoyed to be commissioned to engrave a whole hallway with depictions of the cows whose haunting moos he so appreciates, but will be unhappy if ordered to engrave purring maggots, which he absolutely detests. You don't normally have so many engravers that this would often be relevant, but it's the kind of small detail that really adds a lot to things, I think.
It would work well with context-sensitive engraving. If you give them an order to do engravings in a room designated as a tomb, and request depictions of events from that dwarf's life or preferences, they don't mind as much because it makes sense. On the other hand, if I order my high-SYMPATHY engraver to engrave toads all over the rooms of his friend who absolutely detests toads, he might be very upset by such an inappropriate order.