I think there should be a "therapist" type noble position. Someone who dwarves go to when their long term memories are filled with traumatic experiences. So my understanding is that in the real there are Large T traumas and small t traumas. Some things leave a bigger impression on people and other things tend to build up over time, that is obviously an over simplification, but you get the idea. Back to the game, watching your lover die is a lot different than being caught in the rain, even as a being that truly hates nature. That said small t events can definitely add up to cause severe psychological damage, and depending on the individual a single small t event could cause PTSD and that's valid too (my partner has c-ptsd so I'm not talking out of my ass).
small t trauma would be easier to treat by the "therapist" noble. Dwarves could also meditate on specific memories as well as visiting the "therapist" noble. I think little t trauma memories (getting caught in the rain, seeing a dead body etc. (in the context of a semi feudal fantasy world I'd say seeing a body is little t, depending on the dwarf's personality of course)) should be able to be "forgotten" after meditating on it a bunch or being counseled (allowing a new memory to eventually take its place, good or bad). If the same small t event happens repeatedly (3 times? I have a handful of dwarves with at least three bad rain memories) before being processed by counseling or meditation it could become a Large T memory deleting the other negative rain memories.
I think Large T event memories should be permanent. But meditating on those events or seeking counseling for them should, over time, reduce the stress caused be reliving and remembering these traumas. Dwarves with personalities that would lend themselves to it, (private, stoic, handles stress well, introspection etc.) should be more likely to be able to processes negative memories through mediation, but they should still seek counseling occasionally. Dwarves with a propensity for depression, anxiety or stress should more likely to seek out the "therapist" noble.
I think small t events should still be able to trigger trait changes. I feel like it shouldn't be too hard to keep trait changes when getting rid of memories, because my understanding is trait changes occur often, just through arguments and what not. Id like to have a note indicating the change and perhaps the healed memory, but if there is an issue with computing and memory mechanically for the game I can accept not having a note of the healing process.
All this being said, I still want sad, anxious and, sigh, even rageful dwarves, it adds so much to the game, and its pretty darn realistic, some people just need a little extra help, but they're still valuable members of the fort. I'd just like a better way of dealing with it then waiting till the depressives eventually sink into their final depression, nervous wrecks stumble obliviously till they drop, or I have to seal up a tantruming dwarf to protect the rest. It all, rather tragically, ends in starvation.
I'd be fine if like 15-20 percent if problemed dwarves were lost causes, but as it stand now, the number is way higher. I mean I'm pretty good at keeping people happy at this point, but I remember being new, and it was hell. I think the player still needs to play with dwarven happiness in mind, but it would be nice if some of the problems solved themselves a little easier, at least once the player has a well established fort.
Anyway, enough complaining, I think the memories thing is really cool, and one of the funnest things to build head cannon around. I definitely promote military dwarves based on their traits and life experiences. Can't wait to see how it evolves.