Setting aside the thought that toady probably will never allow it, seeing he doesn't like removing things he put in, and he couldn't stomach mer-farms...
Really, people? You're playing a game where you readily admit to child and fluffy animal slaughter, locking kids in rooms with rabid dogs to make them not care about anything, elaborate traps to shred invaders in the bloodiest way possible, using captured invaders as training dummies... And you can't stomach slavery? That said, I don't know if I would use it, either, but the entire game is a massive suspension of belief to lower ourselves to the psychotic depths necessary to envision and use half the stuff we do...
Back on topic, I think a propaganda idea is cool. If, as you say, dwarves will be more difficult to make happy, then this could very well be useful.
I'm more interested in the civil uprisings that could happen. See the same group of dwarves going "on break" at the same time, all heading to the same area, away from other dwarves, occasionally and steadily increasing in number by pulling in the dwarves around them. Work quality dropping lower and lower, as well as production rates, then suddenly you get the alert, "Urist McCharasmatic has led an uprising! Quell them, quick!" or something like that, with most or all of those dorfs changing to a temporary enemy civ. Subtle use of propoganda can reduce the chance of it happening, great use can increase it. And the leader of the uprising would be using it, as well, to draw in rebels. You could have some highly loyal dwarves report the meetings, allowing you to punish those involved in "civil unrest," which may or may not make things better or worse... They could even kill the dwarf before he could report them, leaving you with a mysterious death with no witnesses.
This, of course, would all be controlled from a init file tag, or series of tags, allowing you to turn this off if you do desire...