I work modularly for function, but with style where it counts, like dining halls, mega projects, fortress entrances, and so on. I've tried organic under cities, and it was time consuming but worth it. The market square was an awesome 3 story plaza with a well and tavern.
I've worked on modular design myself. It would've worked awesomely on an island fort I would've made, but those damn aquifers kinda busted the prospect.
That aside, I had a setup work sorta XCOM-ish, or more like Dune/C&C tiling. Each tile being a 10x10 (shift-direction) scaled.
[] - Small structures/towers
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[][] - Larger (Medium) Structures, warehouses, factories
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[][][] - Enormous (Large) structures, palaces, town center, missile silo, dry-dock/starport, stadium/execution grounds
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[][][][][] - Embark Tile (Enormous), seriously, what else would be the point of structures this la-- Megaproject.
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Usually comes standard with an underground infrastructure connecting structures together one way or another, and maybe even a catwalk system to link from above. This works best in the previous DF version (28.40d) since caverns wouldn't interfere as much; but if you can take advantage of that then bonus. If you can harass Hell with such building, dwarfy.
I'd personally love to see someone make a fully functional dwarven city using this modular building method. Dwarfhattan. Bonus points if it can be built on a long island. Even more points if you can build a dwarven replica of New York City, or equally large city.
Hell, since I mentioned it before, build a replica of an X-Com base. Similar tiling or scaling even. You may need to refer to actual game screens or any wikis that may still exist on the game. Heck, the alien bases are rather dwarfy in design. They have plump helmet farms and everything.
EDIT:
If anyone has ever played Dune (The RTS versions), replicate a functional base, construction yard and everything. Use the game as a map to base off of. Windtraps should be simple to make, just make multi-layered half-domes with windmills all over the place where they can catch wind. Bonus points if you can build this at an actual desert, on rock exclusively. The sand isn't a strong enough foundation. Bonus points if the structures can match the game sprites. If you can find, tame, and ride sandworms, then those aren't dwarves, they're Fremdwarves. Have fun spice-farming. Hmm... sounds like an interesting mod idea. Dune Fortress.
Dwarves would make perfect Fremen, they live in seitch communities already. Why not? We'll need to generate a desert-world however to complete the mod; minimal water, usually as underground rivers or lakes. Not a single aquifer. Each race can be separate houses.