I'm liking the prison idea, but I'm not sure I want to go the magma route - it would be too easy for me to accidentally screw up and dump the whole fortress into magma. (Also she's not got magnetic superpowers.
) But it does give me an idea.
I currently have her in a glass cage in the main meeting area right by the well so everyone passes her. It's a pretty large room and there's nothing on the level above. I can build her, say, a 3x3 room in the middle of the meeting area out of crystal glass blocks. (You know, quality for royalty.) Build up a couple of tiles of Danger Room style spikes on a repeater. Put a pit above her room so that a) I can drop her into it from above to get her in there in the first place, b) I can easily drop training animals in for her.
I can try to build an access passage into the room with a floodgate on it or something so I can more easily get her back out. Or just disassemble a wall when I'm ready. Prisoners don't need food or beds or anything do they? (I'll still stick like a gold statue and a masterwork bed from my Legendary carpenter in there. Quality for royalty again!)
Why in the middle of the meeting hall? Coz that's where my nobles spend all their time, loafing around. Sure, it may look like, here is this goblin, being forced to constantly dodge and block these wooden spikes and having animals dumped in on her to torture her. But then, after some time, when they realize that she is becoming a scar-covered unstoppable killing machine and she is right there on display for everyone to see, along with the possibility that I could ask someone to open her door at the first sign of someone being a problem...
I don't think it could happen but what would be even more awesome is, since she's right there by the well where everyone walks past to see her, she got popular enough to be elected mayor herself. (I've heard of some other strange things being elected mayor, but they have all been (Tame) animals IIRC.)