I just tested this. Turns out I was right. Go figure.
I embarked on near a magma pipe, and quickly constructed a screw pump. I dug a channel that the magma would flow through, and above it I constructed a water wheel. I linked the waterwheel to the screw pump by building a gear assembly a level above the pump and linking that to the screw pump. The total power required was 33, ten for the pump, five for two gear assembly, ten for the water wheel, and three for the horizontal access.
I had a dwarf manually pump the magma. At no time did the waterwheel begin turning. Never did the magma begin powering the screw pump. I checked. I had the game paused and increased it by step.
Now that I have tested this, I shall repeat my original and accurate proposition within this thread.
Magma does not power waterwheels.
And Rowanas, it is an insult to accuse someone of being incorrect without providing any of your own evidence to the contrary. Appropriately, I feel insulted.
The general upshot of this is that you better damn well be correct, because if you're not, the person who feels insulted will come out with his own evidence in support of his own proposition and will prove you wrong. You will then have a reputation for knowing absolutely nothing.
Don't make such bold accusations in the future.