The sexual drive of dwarves could very well be different from humans. If they live for centuries, having offspring only rarely would serve to keep the population stable. Of course, in a moment of crisis, replacing fallen dwarves would be hard. Hey, we don't even know how long their childhood lasts and how long they actually live naturally.
Prostitution, however, has been used more as a solution for population booms than being the cause of it. I mean, historically, prostitution was accepted as a way for men to get their sexual urges satisfied without the risk of another mouth to feed in the family. The professionals themselves didn't have that many children - they had their own ways of lessening the chances of succesful pregnancy. The classy brothels didn't offer only sex, but acted as gentlemen clubs for playing card, bathing and discussing politics.
You should as well remember that before the sexual liberation of women through modern contraception, all sexual acts always carried a heavy risk of pregnancy with them. That is the main reason why even the ladies of the elite were careful in their sexual relations. Getting pregnant is no fun, especially if it is clear the father of the child is not your husband.
All in all, I don't know if prostitution really fits in the dwarven society. One of the reasons is that it seems like a very gender-neutral society. Classic prostitution, of women serving the need of men, requires certain patriarchial society behind it. After all, the idea is to get the pleasure without the consequences. Likewise, if the dwarves live for centuries and reproduce only rarely, their sexual drive might be something entirely different from ours. Who knows, they might even just have a mating season every few years and otherwise be completely asexual.
However, I think the human societies in the world of Dwarf Fortress might well have prostitution in them. As a sidenote, I'm not saying that prostitution is good thing in any level here. I think on a personal level that it is a horrible human tragedy for those involved in such trade. However, it is still one of the oldest professions in our history and I see no reason resist adding it to the game on a moral basis. I mean, maybe if there's prostitution in the game, you could actually try to do something to stop it and help the women stuck in to it?
Aquillon, I like your suggestions and I loved Hidden Agenda. It is an ancient game that can be found from abandonware sites nowadays, to the interested. I think one way to put in consequences for players actions would be alter ego character in the fortress, a sort of local chief. It could even be a retired hero from the adventure mode - one legendary fighter doesn't really change the game balance that much. The actions chosen by the player, such as setting laws and annoying neighbours, might come down on the alter ego character personally. I can imagine elves sending a sniper to take out the evil treekiller instead of a full scale attack.
Social consequences as a whole are nice as well - if they are logical and seem realistic, like the rest of the game. Adding a moralizing aspect to the game would be really lame. I mean, often the ruthless and "evil" societies are much more efficient at doing what they are good at then the more caring ones. Things like health care, good nutrition and so on take away resources that a more uncaring society might be able to use for other purposes.
[ November 02, 2006: Message edited by: Majestic7 ]