Chiming in on the awesomeness of this. I do pottery as a hobby (cone 10 stoneware (porcelain-ish really, but not thin) in oxidization) and can verify Gazz as being quite authoritative here.
I just want to add, with respect to fuel use, that your firing reaction should take into account the amount of product. If it is 10 green->10 finished using 8 fuel, that is ok. If it is 1 green->1 finished, 8 fuel, that probably isnt ok. Kilns generally take many pots (barring really huge pots). The difficulty is in mixing raw goods (cups+jugs in same firing?).
As far as I can see it, all of the ideas here should be implementable in the new version with custom workshops. It'd be nice to be able to use the default kiln building (for game system reasons, not realism), but that probably isn't workable (mod-incapatability).
For low temperature work, it is more common to find lead in the glaze- it makes it melt at a lower temperature, and come out glossy.
You should probably combine this system with brick making, I'm sure there will be piles of threads around, and the kiln part will be similar. Foamy clay bricks are also a good insulator.
As to the production of powders from stone, call it a ball mill (barrel with hard balls rolled about until the balls crush sand into powder)? Its a pretty much required step in creating fine enough powders for glazes not to have chunks and speckles.
As to refining clay, you could probably do the suspension washing (mix in lots of water, let the sand settle out, remove sand, let clay settle out (takes a long time) strain off the water, reclaim clay). Add a bit of power to mix it up, and you probably could scale it up. This would be helpful for all of those sandy-clay soil types, produce both useable sand, and usable clay.
I would definitely go for a dwarven tea-pot industry. This teapot menaces with spikes of iron!