I was thinking of applying such a thing to a 'sprinkler' system in the event of a fire. Though yeah main application in a safe fort towards firey critters and magma, both of which can be detected now. (except maybe fire breath and fireballs). The reverse with freezing would be cold weather and critters, systems to react to lakes freezing. (if you get your water from them for example). Or detecting freezing critters, which can be done. (The lake freezing actually sounds like a decent use for those that mechanise to solve problems in complicated fashions). A general concern though is that such devices would be very specialised to responding to certain temperatures
Otherwise I'd agree it would be reinventing the wheel, still an interesting thing to have for the sake of it though, like having a flow/pressure sensor too would be fun. (For controlling flow of water across z-levels I'd guess). Generally useless, but debatably so is all advanced mechanics that has been done too. Technically as well the way pressure plates differentiate between water and magma may already use this technology anyway =P (Toady always beats us to this stuff it seems).
The dwarf talk made me laugh though, makes sense to us and really if a civillisation has knowledge and ability and observes something long enough they should be able to work something out. Its why I side on dwarves having access to basic steam power at least, between them also living underground and in future I hope DF will create a need to circulate air as fortresses get deeper and more complicated so increases chances of stagnant oxygen poor air. Between understanding air flow, witnessing steam, having ample resources and ability to make the systems its quite plausible for them to do it.
Combustion engines I would disagree with though, they simply have no need of it underground, they would just use their steam engines and cranks to move stuff around at most and in a 3 dimensional world that is living underground. (ours being 2D by comparison). There would be no sensible standalone system of engine and moving parts to help dwarven life. Boats can be tugged up and down rivers by boats. (when dwarves encounter them underground anyway). And boats are as close as it would get I imagine with a possible need to traverse large bodies of water, (underground?), with no way to walk around them, and particularly wide ones may warrant fast crossings, but are too expensive for mechanised boats to be cranked across them.
So I see dwarves as having no more than basic steam turbines (have an irritating tendency to want to call them steam engines =P). And them never reaching electricity (Only DF race I see doing it is humans, but maybe gobos if they got their act together)
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The idea of giant screws as a replacement water wheel sounds interesting though, only it would create power in front of behind it such as the direction of water flowing through it would be, though it would work and probably be decently more efficent as well.
Another stray thought relating to tech trees and such though, would be interesting if requirements to a civ developing new technology x were developed though, such as easy access to list of resources y for z years and then have the birth of a particularly bright individual a encountering scenario b, (such as a war, a problem, scientific observation, a business opportunity) that can teach/need technology x whilst having access to list of resources y. Not many things could be applied, but would provide interesting modding opportunities and be an interesting plot element for adventuring when you encounter these inventors on the verge of success. I would suggest only putting bonuses there or procedurally generated 'goodies', but would be an interesting plot element for adventure mode.