Nice thought on the menacing spike, I might use that to adorn a few bodies around, but I'd like most of the captives to be live.
No tinsel, no light, no crap. This isn't a Christmas tree. This is more akin to the tree at the start of 300 that had hanging bodies from it.
No chains, mainly because they'll interrupt my dwarves. A chained elf causes job cancels, which gets difficult with the scale I want to achieve, and it just doesn't appeal to me as much.
Chains don't restrict Z level movement, so technically if you chained a dog at the bottom of a 50Z stairway, that dog would be able to travel across all 50 levels, so long as it was within the 3x3 area. Hanging creatures will hang, somewhat, but tend to get stuck in the "falling" status, which makes the untouchable and very annoying. They don't suffocate, not until Toady adds that.
You're right about the color though. Perhaps I'll use something bright for the cages. Tower-caps, or spore trees... I may or may not get some tunnel tuber or fungiwood for purple or yellow, to make some hanging vines. That's a bit more effort than I was intending to make. A gaunt, 'living dead tree' bearing wicked fruit despite the lack of leaves and the inert trunk, is really what I wanted.