To compress coal into a diamond, one requires immense amounts of heat and pressure. The 'wizardry' involved is the knowledge of how to utilize that heat and pressure to achieve the desired result. I've fashioned a number of in-character reasons why wizards need to use external sources of heat, but I'm yet not sure which one is official. Ultimately, it's a balance issue. Without some kind of fuel reagent the reactions are just too powerful. Magma versions of the workshops should be easy enough with the [NEEDS_MAGMA] tag, I'll try to include them.
The red wizards suffocate/bleed to death when trapped in magma with no way out. Last version, I took off their tissues' temperature resistances because they aren't caste-level tags (they affected every wizard, not just the red, and that was pretty lame). So, they're immune to heat damage because of the immunity tokens, but I think the temperature makes their blood boil away. I'm working on this.
Next version I hope to include gemstone chain mail and leggings, chains, mechanisms, toys and pretty much anything else that could be made of stone or metal. I'm also experimenting with ways of creating mass quantities of cheap building material, to make building the basic structure of the tower easier. I still believe in some form of thermodynamic law, so it cannot be something from nothing, but for game purposes it could just as well be, if the created product is worthless enough.