Well, after somewhat less than a year (real time) of playing DF, I've finally seen my first loyalty cascade.
In a mature fort, in the middle of relocating the entire mountainhome from the top 15 z-levels down to just above the magma sea (only source of magma found at this embark), with a population of ~215 (with all of the adults in the militia and fully armed and armored with steel), I mustered the entire militia and sent them out to save a dwarven merchant caravan from an ambush.
And with a single misplaced keystroke (on the "kill from list" menu), I ordered my whole militia to slaughter five goblins and one innocent merchant. Meanwhile, confident of my victory, I went back to following my miners around digging out what was going to be my lower level guard-room / barracks.
After watching the red "C" pop up a few times I decided to ignore it...then realized on a check through the "U" menu that there weren't any goblins left and my dwarves were still popping up fighting notifications. A quick jump back to the surface revealed it already littered with bodies.
At this point, I wasn't even sure who was in what faction so I just let the whole thing play out...wow...dwarves slaughtering dwarves, children punching in each other's skull, a marksdwarf obliterating traitorous swine (literally; he decided my huge herd of pigs was in the wrong faction and went about patiently exterminating all of them).
The final act of civil war was my manager, broken and crippled, leaning against the inside of the fortress's curtain wall, being calmly shot to death by the mayor.
Now, I am left with the mayor, two planters, and a miller, all (fortunately) excellent fighters armed and armored in steel, trying to clean up the remains of more than 200 brutally murdered dwarves while avoiding getting beaten to death by violent ghosts and the seasonal goblin and kobold attacks (fortunately, the outer trap corridors are still functional, although that is likely to end after the next siege since I don't have enough dwarves to unjam them between attacks).
The latest siege has just showed up. Time to muster the troops! My only hope at this point is for immigrants to show up before a really nasty forgotten beast, titan, or flying megabeast shows up. I'm pretty sure having 99% of my population murdered in the last year is a pretty solid deterrent against immigration, despite the fortress's wealth...