The main obstacle to the development of effective steam engines was building strong enough boilers, since the metalcrafting technology of the time required them to be splices together from many smaller pieces. Dwarves are known for their metalcrafting genius, so I could see them developing steam power a fair bit earlier than historical humans. ...
My understanding was that the main obstacles to early effective steam engines were how cheap labor was to start with compared to fuel, the difficulty of making vessels that were accurately round for pistons, and poor options for seals, valves, and packing / glands. The first commercially useful steam engines (Newcomen, around 1712) went through several cycles of improvement, including Smeaton improving them by a factor of three, and still Watt concluded that they wasted more than 80% of the steam. Early "atmospheric" steam engines were quite low pressure; they are actually better described as vacuum engines, as the primary mechanical work is done by atmospheric pressure acting against a vacuum created by condensing low-pressure steam.
When [John] Smeaton saw the first engine he reported to the Society of Engineers that 'neither the tools nor the workmen existed who could manufacture such a complex machine with sufficient precision'
Watt's improvements demanded primarily more reliably *round* cylinders. It wasn't until Wilkinson's double-supported cannon boring machine of around 1774 that technology was capable of doing what was needed, and Boulton & Watt's engines starting around 1776 were the first to become widespread.
Note the date issues here: DF's cutoff is ~1400, and the first usable steam engines were ~1712, 312 years later. Putting a useful steam engine into DF is as anachronistic as giving Newcomen an iPhone to do his calculations on, or providing supersonic strike fighters with laser-guided missiles to the belligerents in the War of the Spanish Succession. By comparison, supplying a few crates of Colt .45 automatics to one side of the American Revolution in some sort of Turtledove-like alternate history would be only 135 years off, well under half as chronologically anachronistic, and it is easy to see how astoundingly disruptive it would be.
Note also that the Newcomen steam engine had performance that was somewhat underwhelming in DF terms. From a 1719 engraving and description:
The Great Balanced Beam vibrates 12 times in a minute and each stroke lifts up 10 gallons of water 51 yards perpendicular.
There's some question about exactly what gallon is being referred to; if we assume the Queen Anne wine gallon of 1706 (which remains the basis of the US gallon of today), that's 120 gallons per minute (around 454 liters per minute). A fortress mode tick is 1.2 minutes; a DF pump is capable of moving a 7/7 full square of water per tick. If we assume a 2m side for a DF square, that's 8 m^3, or 8000 liters in 1.2 minutes, or around 6,667 liters per minute. That means a DF pump, whether hand-cranked by a stubby alcoholic or powered by a series of gears connected to a windmill or waterwheel, has a flow rate just under 15 times that of the early steam engine. (You could argue that the Newcomen pump was better at heights, as in DF terms it's more like a cross between a pump and a well; you'd need several DF pumps in a pump stack to get the same vertical lift as they can't pressurize their output above their own level or draw from more than one square below their level.)
The first high-pressure steam engine was arguably Trevithick's around 1799. Even given the *enormous* economic incentive (several steam engine improvements were sold with the profit coming entirely from a cut of the reduction in fuel costs to the operator), a wide variety of brilliant inventors, dramatically improving engineering from military spin-offs, and a total population many times that of an entire DF world, it took around a hundred years of concerted development to go from the first "Miner's Friend" steam-assisted pump to the first usable high-pressure steam engine, and the distinguishing characteristic of steam engines for a century more than that was "they blow up unpredictably".
Don't get me wrong; I *like* clockpunk, gaslight fantasy, steampunk, and the like. But even "early" steam is both wildly inappropriate for DF, and both far harder and far less useful than people realize.