Yep. That's my advice. I've had *lots* of loyalty cascades (goes hand in hand with my habit of keeping pet were beasts :-) ). I've never lost a fortress to either yet. In fact, I don't think I've ever lost more than 10 dwarfs per fortress to both kinds of incidents combined. Put up a burrow somewhere out of the way. Make your military inactive. Lock doors (or strategically retreat as far as you can and *build* doors/walls :-) ). If you are desperate, as a delaying tactic, throw one or two military into the fray (you can station individual dwarfs -- the UI is a bit clumsy, but if I can figure it out, then anybody can ;-) ). Everybody else should boot it to the burrow. The slightly annoying thing is that for a loyalty cascade, you can't use military alerts -- because all your potentially vengence-infected dwarfs will go marching to the burrow as well -- you have to physically assign everybody that is out of eyesight of the brawl to the burrow. The other annoying thing is that you have to wait until one side of the conflict is dead. So if you get incapacitated dwarfs who are whiffing on each other, you just have to wait until they bleed out. However, you can slowly start expanding your burrow and setting up doors to take things back. Once the area is secured by locked doors, you can lift the burrow.
But in the vast majority of cases that I've had, it's never gotten bad. As soon as I see a strange combat report, I pause and lock the door to the tavern :-). Usually I keep my tavern slightly separated from the rest of the fortress with a long entrance as well... just in case.