My take on magic is that, as this and other threads evidence, it's going to be a difficult thing for Toady to get right. After all, there's the whole spread of viewpoints here, from it should be chaotic and almost always dangerous if not outright apocalyptic, to it should be controllable, useful, and only very rarely go 'wrong' any more than your forge goes wrong.
I am not convinced that magic should be too free of rules. There is no inherent reason that it should be, except that "magic" is used as a catch-all explanation in stories where the author needs a deus ex machina to tie things up neatly. There are plenty of examples of settings where magic is controllable, knowable, and predictable - and quite often they are better for it, rather than magic just being, well, a magical solve-everything that the heroes save the day with.
On the other hand, I sympathise with the argument that making magic too industrial makes it ultimately rather pointless. Magic needs to do things which you can't do otherwise for it to be truly meaningful. That does not mean that magic should be barred from things which you can do otherwise, only that it shouldn't be limited to that. There is something which people may be overlooking here, which could have deep ramifications if Toady were to run with it. Essentially magic might make something else completely pointless, which means your dwarves would never develop it in the first place. If you have excellent healing magic, there's little reason to develop medicine along the lines which we have it IRL, or as dwarves currently have it - there is simply no point to learning how to set bones and suture wounds when you can cast a spell to do it instead. So one thing I envision magic as possibly doing is replacing other tasks; you'd need to build and stock a library for your doctor-mage to study in and supply him/her with reagents necessary for spellcasting, rather than having a regular doctor with a hospital and casts and crutches. Similarly, magic should effect the expectations of a society; if someone today figured out a spell to bring the dead back IRL, we would have massive qualms about it. If we had been able to do so since time immemorial, our attitudes to death and necromancy would be completely different; there is no inherent reason necromancy should always be seen as bad by a civ who is used to it. Magic should be intertwined with the social evolution (Or more prosaically, the procedural generation) of societies in-game. This is where we find the best potential for storytelling, too. If the Elves have necromancy, Dwarves might be deeply averse to it. But then your mage goes off and experiments with it anyhow and all sorts of Fun occurs as half your fortress sets out to burn him, he uses his zombies/skeletons/whatever to defend himself, and then the Elves show up and because they're so much better at it, some three thousand year old Elf necromancer hijack control of the rogue mage's creations and try to sabotage you from the inside, pulling levers and breaking down doors as well as attacking your dwarves.
I don't think magic should be the same in every world, however. Ideally, I think the type of magic should be generated at world start - which fundamental set of rules it follows, which spheres are tied to which spells, etc. - it should influence and be influenced by the societies in the world, and it should be learnable and controllable - the potential for Fun should come more from misuse, poor planning, or outright hubris, rather than from the vengeance of a chaotic RNG; but this situation would still ensure that you needed to do experimentation and research to find out what is safe to do and what is not and thus preserve what I would consider a reasonable element of unpredictability and uncertainty.
If this was the approach taken, we would probably want a wide variety of possibilities in how magic can potentially work. To outline what I mean here, consider three different worlds; The Oracular Realm, The Eternal Dimensions, and The Infinite Lands. Please note that I am offering these as examples for consideration and comparison, not as hard-and-fast ideas on how I think magic should work.
In The Oracular Realm, magic is easy, bombastic, and commonplace. There are few farms because even a five year old can summon food in great abundance. Constructions are bound together with easily-woven spells, indeed whole buildings are built out of magical blocks which are faster to erect than the most legendary of masons could manage, and wars are fought with people throwing around fireballs and lightning bolts with reckless abandon. On the other hand, magic is subordinate to a particular race of demons, and if they show up they can twist any magic as they please; summoned food turns to ash in your mouth, buildings collapse into rubble or disappear entirely, fireballs explode in your hands, lightning bolts are no more powerful than a static shock.
In The Eternal Dimensions, magic is a far more subtle affair. You'll never see someone bring forth something from nothing; you won't find mages flinging fireballs around. But the right incantations can give an iron sword five times it's natural tensile strength. An enchanted idol will mean it takes thrice as long between needing sleep. The right words and rites can make a crop grow a little faster, a little bigger - subtler things, but still potent in the right hands. But a botched rite by an inexpert mage could have the opposite effect, making steel as flimsy as wood, putting a dwarf into a coma, or dooming a crop to take three seasons to mature. Training, practice, and experience matter in The Eternal Dimensions, and a dwarf is well educated and schooled before he or she is allowed to take their magic into the world. The very best smiths, craftsdwarves, and so forth are excellent both in their craft proper and in related schools of magic, letting them create unbelievably formidable enchanted weapons or amulets or what have you.
For The Infinite Lands, magic derives from forces and deities, and is less directly controllable. A fortress which ensures the construction of a proper temple to their god of wind, the sky, and water, and which sees to the proper worship and respect of this god, will find their crossbow bolts fly straighter than they otherwise would; dwarves can swim faster, more easily, and at less risk of drowning. Sacrificing animals to the god of war and mountains might see their miners digging out rocks slightly more rapidly; sacrificing goblins will make the military more capable of fighting goblins in future, with small but nonetheless ever-present bonuses to combat rolls. Meanwhile another fortress, which has settled in a swamp diffused with a malevolent force, will find things do not go their way. One year, the caravan never arrives, lost on the journey. A well inexplicably begins to give mildly poisoned water, and has to be broken and rebuilt with a new bucket. No matter how hard he trains, Urist McShooty takes far longer than is normal to gain skill in crossbow use. Finding out how to appease this force could form a major objective of the fortress.
Again, these are examples intended to highlight potential different ways magic could be implemented, and how differences in it could lead to different scenarios and influence how you play the game, whilst being consistent within their own sets of rules and learnable to those who make the effort. The storytelling possibilities would grow naturally from the difference systems that could be generated combined with the unique situation of a civilization depending on their history, beliefs, deities, and the biomes your fortress is in. It is my opinion that this system would be a good compromise between predictability and randomness and would help create unique, engaging scenarios with plenty of potential for Fun.