I've discussed before why I think sewage and waste disposal would add an excellent and challenging dynamic to the game, so believe me I think it would be a great feature to add or make optional, but as it stands Toady isn't interested. Maybe he'll change his mind, and maybe as the game gets closer to completion he will agree that it isn't enough of an issue to worry about affecting the game.
As for breeding via spores, I don't think that's behavior as intended, but a stand in until proper reproduction can be added: despite not wanting dwarves to have sex or defecate, he did mention that he wants animals to be as realistic as possible: expect manure to be used for tanning and fertilizing in time. I think by that time, we'll have animal breeding (though maybe not reproductive organs in the anatomy) as a by-product of the need for controlled animal husbandry.
Dwarves reproducing by spores is debatable, since dwarves only marry when they're in the fortress together, only have kids when they marry, and the current setup where eating, drinking, breaking, sleeping, etc. takes days on end is probably a simplification so you don't have dwarves sleeping for 5 frames or so every 30 seconds (probably to preserve FPS, since a dwarf recalculating his jobs and pathing so frequently every in-game day would drain processing power); working under that assumption there's plenty of time for nightly nuptials.
Regardless, I'm sure breeding via spores is not the "canon" answer, just a placeholder.