I think the point to hard magic is (takes off game designer hat and puts on storyteller hat) that it shouldn't be cureall. It should be the solution of last resort. Kind of like there are no small nukes. Sure, the US has them, but we don't use them except as a very last resort, because the consequenses are so horrendous.
Think about how often Gandalf (the prototypical wizard) used magic. He didn't. He used lore a lot, he fought a lot, but just about the only spell he every cast was 'light'. Not because he couldn't, but because there were better(certainly more interesting and aproachable to the reader) ways to do the things that magic could do. High magic detracts from the players choices and makes impossible the hard fantasy tolkien stories we've got now.
It's certainly a valid way to tell a story, and I don't begrudge anybody for wanting to tell the kinds of stories that don't have magical solutions
Now... Back to the game:
1: Anything in the game will end up in the players hands.
2: Vanilla DF is maybe 20% of the intended eventual use of the DF codebase. It's specifically built to be modable with new races, items, weapons, tools, metals, whatever. Saying that your paticular version of your particular fantasy world doesn't have high magic is a piss poor argument for why the DF codebase should not support a high magic world. The eventual addition of magic will not be the deathnell for the hard fantasy (that is the high realism, low magic, high medieval period with orcs fantasy that we have now) unless people abandon it en masse for the magical version. Personally, I see future distributions with a radiobutton at world creation. Do you want to create a world for : SteamPunk, True Medieval, Tolkien, Standard Fantasy, Post Apocalyptic, with the game using the right raws for it. Most of these are already possible, and quite a few exist.