The mouth could be used to carry pipes and other things that you would logically carry in your mouth.
What else do you logically carry in your mouth eh?
I'm not sure if "ambivalent" is the right word. By now, I think they mostly clear-cut regions because FUCK ELVES.
And because they need beds and barrels and shit, 'course.
Please, don't swear, it's not against the rules but it's crude and makes you look like a moron. Dwarves don't hate elves, players do, but the two often seem to get confused. I personally have never had a problem with elves, but that's because IIRC elven diplomats are broken.
I personally don't think that controversy is a good reason to not include smoking. Look at Fallout, it contains prostitution, sex, drugs, alcohol, gore, swearing, violence, the list goes on; but it is a good game. Mafia II also contains sex, drugs, alcohol, swearing, violence and discrimination. These games are commercial games, and they don't worry about controversy, but they are the only ones that really should, since the media could kick up a shitstorm about it (like in Modern Warfare 2). The other reason not to add these things in is because of ratings, but DF doesn't have to worry about ratings, since it isn't sold.
Also, if drugs get added into the game, it will probably be in such a way that it is by no means necessary to actually use drugs in the game. My model on page 2 is an example of how this could be done.
Given that elves don't appreciate you chopping down trees, would they actually burn dried plant leaves and inhale the smoke?
Yes, they probably would. Elves themselves use wood for everything, it's just that they do it the right way.
In my opinion, the Elves are like the Maori (native New Zealanders). The Maori have no objection to deforestation, in fact they did a lot of it, but they didn't particularly like the Europeans doing it, that it because they would always pray to Tane, the forest god, before cutting them down. There's a myth that goes like this:
Rata was in the forest wandering about wondering what to do about retrieving the body of his father who had recently died when he decided he would chop down a tree and build a waka.
He selected a Totara, felled it, and went home planning to return in the morning to begin building the waka. When he did return he found the tree wasnt lying on the ground as he'd left it but standing as if it had never been felled.
He chopped the tree down again this time trimming the trunk and removing the bark and and went home with the same result when he returned the next day.
He chopped the tree down a third time, this time trimming and shaping the tree and scooping out the inside and decided to sneak back during the night to see what was happening.
When he approached the tree in the dark he saw to his amazement that birds and insects were reassembling the tree to return it to its original state.
Rata apologised for chopping down the Totara and explained why he was doing so (to retrieve his Father), then offered to help lift the Totara back into place.
When dawn came Rata was all alone, the little creatures had gone, and the Totara was back in its original state. Rata vowed to never chop down another tree, and a voice near him told him that he may, but he must ask permission from Tane Mahuta first.
As Rata returned home he came across a mighty war canoe sitting on logs in the forest, and he asked if it was his, and the voice said "yes, Rata's waka"
I believe that this is what the elves are like, they have no specific qualms about felling trees and harming nature, but they respect it. The Maori also used tools similar to elves, most of their weapons were wood or stone (sometimes obsidian).
Elves probably wouldn't smoke drugs though, they would be more likely to just chew them, since it takes less work to do and they are always around the drugs. I would imagine that they would just walk along and pick a hemp leaf to chew.
Dwarves seem to be the sort of people that would smoke drugs, since they go through many extra processes to get items of particular quality, like how they make soap, or how they get honey and make mead.
Goblins would probably just do whatever they can, probably smoking what they loot and then chewing the rest of the time. I can imagine that they might do a crude form of injection by cutting themselves and then rubbing the liquid drug in.
We don't have addiction to alcohol in the game, dwarves just need it to operate at peak efficiency.
That is alcoholism. Functional alcoholism, to be correct. In real life, when people are addicted to alcohol, they don't operate very well at all, they are depressed, lazy, demotivated, etc.
It's just that with dwarves, the effects of being drunk are far less. Maybe they don't even get drunk, since they are so acclimatised to alcohol.