A bit more detailed answer:
1. Is it possible to mod an entity or body within the mechanics of the game? IE dwarves find a mineral that makes them mutate - or the like.
Currently no unless you calculate removing skin/fat by necrosis.
2. Is it possible to add custom workshops/objects to strange moods?
Yes and no. Any object may be used as the result of mood. On the other hand the workshop - skill linkage in moods is hardcoded, so we can't alter that.
3. Is it possible to add special attacks to weapons? Such as a magic staff with the ability to throw fireballs the way an imp can. And if so a way to scale the damage.
Only partially and only in ammunition. You can create special material with a syndrome and correct boiling point. Then create special reaction to make ammunition from that material. Finally the ammo needs to get stuck inside enemy, which in combination of boiling point and hometherm causes the ammo to boil, releasing the syndrome of the material.
4. Is it possible/how can I add existing reactions to a different workshop? Such as adding chairs, beds, etc, to a Furnishings workshop?
Again you can but only partially. Besides any custom workshop you create yourself you can use the following workshops:
KILN, SMELTER, TANNER, KITCHEN, QUERN, MILLSTONE, STILL, CRAFTSMAN
5. Is there a single entry I can use to designate any kind of Axe for building a workshop or have a choice for two separate building materials? I am creating a sawmill and wish it to require 3 axes (metal or training)
Yes, you use the BUILD_ITEM tag.
6. Heavy armor decreases speed, is there a way to reverse this? Such as creating "Boots of Speed" or a similar object for increasing damage "Gloves of Strength".
Not possible at the moment.
7. Is it possible to guarantee a stone will be an aquifer on any map that contains it? Such as a "Water Stone" that appears in small clusters. Related, is it possible to build a structure that acts as an aquifer? Such as a "Fountain" object that once placed creates an infinite water source?
Well, it would be a bit tricky. First of all you must create the stone with AQUIFER tag. Next you must remove that tag from every single entry except your own stone. Finally in embark screen you find a spot which says AQUIFER. Note that I don't know how the game handles aquifer stones which only appears in clusters, though there is no other way to do that by modding.
8. Is it possible to let a ranged attack initiate a hold? Such as using a "grapple hook" ranged weapon.
Nope as the ammunition used in ranged attacks are separated from the weapon, thus there is no connection between the two after the shot is made. In theory, just like in melee combat, if there was actually a way to keep the ammo connected to the weapon, like with rope, then stuck ammo would cause the DF equivalent of hold. But alas that's impossible at the moment.