I didn't take the time to read the whole thread, so I don't know if it's been suggested yet, but I think it'd be spiffy if magic was handled in sort of a regional way, for example in world gen there could be a number of magical "sources" that are invisible, almost like magnetic fields, and you could use magic by learning to draw energy from them. Example, magic would be more bountiful in a more magically charged zone, and therefore you could cast more spells, and more stable spells over all. the sources could vary, I.E. cold zones, hot zones, water zones, earth zones, for the varying elements; Volcanoes having strong fire/heat based magic, and glaciers having strong ice/cold magic. The magical value could be set in world gen, effectively allowing you to turn off magic for a straight up dark fantasy setting, or turn it on for wizard battles. If it was a world gen parameter, it would be possible to gen a world with very little magic, etc. Magic, in ff8 fashion, could be stored for later use, but possibly would be less powerful if not used, as there could be spell 'decay' and how many/how powerful the spells you could store would be based on your magic affinity/memory. The power/stability of magic could be determined by the creatures magic affinity, which would be a generated stat, I.E your dwarf could be born with an incredibly high affinity, and be chucking spells around like a natural, while most would have to study/train a bit to reach that level. Stability could be based on a multitude of things, such as focus, intelligence, magic affinity, etc, basically in that casting spells within your range is a bit less troublesome, but casting high level doomsday spells could have very adverse effects, perhaps such as causing insanity. (in call of cthulhu/cthulhu d20 fashion) Perhaps if there was spell decay, if you let too many of them decay it could adversely affect your creature. Continuing with spell stability, suppose you cast an ice spell at a target, but it's out of your league or your dwarf has ADD. In this situation, the dwarf could accidentally miscast, freezing himself, missing the target, or possibly freezing one of his organs. Miscasting a high level fire spell (Perhaps summoning a fire storm) could cause a massive explosion that could gib any dwarf in the immediate area. (maybe dead/evil zones could have evil magic, so that there could be necromancers so that the undead would have an actual source? Perhaps there wouldn't be any undead unless there was evil magic? It'd be crazy if there was a necromancer raising an army of undead and sweeping across the country side, eventually conquering the world, being even better if you, the player could, in adventure mode.)
(Perhaps magic could be entity based, too? Maybe entities, such as god like creatures that civilizations worship, could invent spells? or teach magic to the mortals? Perhaps by devoting worship to an entity you could gain favor and magical prowess? Maybe it could be something like, there are the elements of the earth, the different types of magic (there wouldn't have to be only elemental powers, ala final fantasy, with space, time, and forbidden magic such as death spells, gravity spells, and those that shift time in your favor) and for each of these types of magic, there could be sets of deities or creatures that represent them, and could be randomly generated (fire dragon, ice buffallo, death kobold) type things that you could show favor to, or learn magic from?)
i dunno, just my thoughts.