When reading the latest replies free association from the term "the heart of the mountain" gave me an idea:
What if (dwarven) magic was associated with a "heart of the mountain". Where would that be found? In the deepest part of the mountain of course. Where is that? In the pits of course. With the Hidden Fun Stuff. Why did Moria fail? They found the pits and Mrs. Balrog who hadn't had her painkillers and was in the special time of the month. What if the Moria dwarves had conquered their pits? They'd have found the Heart of the Mountain and gained magic.
Of course, other people want access to that too. Like dragons, titans and armies of goblins.
I like this idea, but in the proper DF spirit, I think it could be made hideously dangerous.
Suppose that magic itself-atleast epic level magic- was like radiation-as has previously been suggested-but radioactive in the sense (more or less) that plutonium is radioactive.
The raw, wild essence of Magic itself would be what the adamantium sphere was created to contain, and Demons just the aftereffect--Demons would essentially be the result of creatures trapped inside, absorbing that radiation over centuries, which would keep them alive, and make them more powerful, more twisted, more evil/insane.
Mining into the adamantium would release the magic, which would then flow from that point, through stone, water, lava, creatures, whatever's in the way, infusing everything it touches with magical potential.
Each raw element would have a "transforms into ___ when touched by magic, after such and such a time" tag in the Raws, or several random options, and these could either be good (gold ore = magical ore), or bad (goblin = cyclops), with an emphasis on bad.
This doesn't mean that every single rock, tree, and goat in the game suddenly turns into something
other, it just means that there would be a kind of "leyline" across the map, where a lot of weird stuff would suddenly be going on.
Opening up one of these adamantium eggs would not only potentially cause a lot of problems in the short term, (suddenly, a herd of goats transforms into a herd of tyrannosaurus) but the effect would occur across the map, potentially making turning an enemy fortress of goblins into, say, an enemy fortress of ice giants.
You'd also tick off other Nations, who might have a big problem with you releasing what amounts to an unnatural disaster onto the entire world, just so you can score some adamantium. Who do you think you are, anyway? That adamantium was there for a reason!
The demons that you normally encounter might also be a lot worse. Maybe the ones you immediately have to deal with are just the stupidest, angriest, crazy tip of the iceberg, and most of the (smarter, faster, stronger) released demons teleport away right after they escape, to cause future problems.
This has the advantage of giving adamantium a real use in the game--other than simply making everything relatively easy, and pretty much ending the game. You'd *need* adamantium items, simply to survive against the most powerful demons, the strongest mutations, the worst cataclysms of the magic release. Some of the baddest demons might actually be resistant or immune to damage from anything other than adamantium weapons.
The magic flow itself would have some advantages, however, and you could eventually harness it for yourself. Tiles in contact with the flow could have special properties. They could have random trap effects--much hotter or colder than the surrounding area, be immensely poisonous, cause incurable diseases, be permanently dark, or filled with electricity, any effect a "spell" would normally produce, except without the ability to cast the spell. It would just be a localized effect that you could maybe take advantage of, by building your fortress around it (which I think better keeps within the theme of the game).
Spells themselves might possibly be researched/developed over time, but I think it would actually work better in DF if magic was too volatile to try to actually force into doing anything for you.
You could be benefited by magic, or even make things from magical ore, or a magical gem, but trying to get this flow of raw wild magic to do something that it doesn't want to do would be like us trying to go back in time, or go faster than light. We might someday be able to do it, but not any time within the forseeable future. Learning to cast spells would be like learning to use a whole new type of physics that we've never encountered before.
Having magic work in this crazy, unpredictable, and dangerous way, would make the late-game a lot more fun, as you try to deal with what's now a low-magic world, suddenly and randomly being altered into a high-magic world. It would keep the game challenging and interesting-no matter how developed and advanced your fortress had gotten-without negating all the hard work and effort you put into it, up to that point
Spells are blah. Wizards flinging a grocery list of game-breaking abilities is more blah. World-shattering magical apocalypse is fun.
That said, there could be a lot of low-magic effects that would be accessible before the adamantium was breached (caused by magic "leaking" out of the adamantium). Somebody, I'm not sure who, but thanks!-had the excellent suggestion of dreamcatchers helping bad moods. To this could be added things like glowing gems, 1-use magic soap that "washed" a year off of a dwarf's life, making him/her younger, candles that created clouds of sleep-inducing gas, either making dwarfs sleep better, or as a trap; items that never wore out, or that made the user more skilled in their use, or that did work on their own, leathers/hides that allowed shapechanging into whatever they were made from, for a short period of time, etc.
I think dwarfs should be confined to this type of "item-creation" magic.
Elfs might only be able to grow plants with "magical" properties--plants that produce a lot of food in a small space, or that cure illness, or carnivorous guard-plants. Stuff like that, that you could possibly trade seeds with them for.
Humans might have priests that, while they might not have "holy spells" to fling, would be able to make items that repel undead creatures, like crosses vs vampires, or bless things, making holy water, or weapons that damage demons, that type of thing.
Evil races might be able to make cursed items, poisons, acids, etc.
The only ones that I think should be flinging around fireballs and that sort of thing, should be the more powerful demons, and whoever "built" the adamantium cages in the first place--who may very well be Gandalf-level demigod wizard types, and who may not look too favorably upon whoever released the demons.