Okay, so you're talking about a normal fort done like you're getting paid to succeed, and a side goal of a group of 7 dwarves who are doomed to hate life? I totally get that, but how many dwarves will the fort need to have before you start separating out victims? You can't just start doing this the first day of embarkation or the PvP would totally take over the thing. Arbitrarily waiting one year should get you lots of newcomers, but the first migration wave might get you more than enough.
How are the victims going to be determined? First overseer gets first pick?
As has been mentioned it's a bit late now since things have changed, but for your sake I'll flesh out my original idea a bit more even if it doesn't mean much now.
Whelp, the way I had envisioned it, which of course is malleable to fit the fortress, would be to only have to deal with one dwarf at a time, the previous overseer. Naturally that leaves player one without someone to pick on, but if it's rotary then it wouldn't matter in the long run, and like you pointed out the first year wouldn't be an idea time to start thinking about it anyhow.
So, hypothetical scenario. Player 1 finishes their year and names Dwarf 1 after themselves. Player 2 then takes the helm and goes about their business, but also has as much fun with Dwarf 1 as they want, which could be lots, it could be none at all, without killing them. When Player 2 is done they throw in a Dwarf 2, and pass it on to Player 3. Dwarf 1 doesn't matter to Player 3 at all, and they can be released from whatever hell they're in, or fight in the military and get killed, without it mattering. The only dwarf that matters to Player 3 is Dwarf 2. That way there would be less to juggle so it's fun, not a chore, not that it couldn't be optional period.