Hm, "can't use wood to work on wood" makes some sense...Actually, this makes me wonder on the physics of anvils (working on things from materials as strong or stronger than the anvil itself), perhaps in the future they might accumulate wear with use, dependent on hardness difficulty? (So you'd ruin several iron|steel anvils when trying to make a steel|adamantine one, requiring a job to take place across multiple workshops, but in exchange the product will last much longer.)
However, irl really hot things have different fracture/yield values, so...A conundrum.
Regardless of irl→simulation inaccuracies (dragons usually in ruins rather than caves :p), I guess this makes only wooden spears have a somewhat easily-applies use out of the training weapons, beating on harmless prisoners excepted?
On zero-item embarks, I guess natural caves are the only way to get subterranean areas, where the water can be transported after. Hm, I have not previously considered it, but I guess if you want overhangs in landscape you will have to make them yourself - similarly, I've yet to see water dig inside a mountain, though I've seen mentions of underground rivers, thus making it perhaps possible with crazy z-levels.
If your biome spawns alligators/crocs/beak dogs/ostriches/barn owls you could have source of gizzard stones, which might be fire-safe. With magma access and shearable animals (not wagon-pullers, so would have to rely on migrants or perhaps be playing as elves [if they can tame wild animals without cages] ), could get a bag for sand, enabling vials for waterskins and trap components for value generation as well as secure entrances via hatch covers and quite presentable dining rooms and barracks.
Hm, now I kinda want to do such no-caravan embark on a volcano....A moody glassmaker can make a bed for dormitory, but can a moody mechanic use clay or gizzard stones to make mechanisms? Otherwise, I wonder if you could have overflowing volcano create a dip pit for minecart and then have water one right after to extinguish the cart and get magma inside cart to turn into obsidian boulder....