Just been listening to the Dwarf Fortress podcast, I was really glad to hear the reservations that Toady had regarding this, and rightly so.
Part of the brilliance of DF, is the survivalist raw edge, and feeling of danger from mythical beasts etc.
Magic is a big hammer to wield and will break most of the more delicate mechanisms within DF.
However, in the fantasy genre it is difficult to avoid, and the DF world would benefit from the additional depth that magic could bring, so I was thinking of how this could be implemented without breaking the game.
Initially I thought of Divine magics I stead of arcane, building a temple, assigning a priest, and having some magic available:
Heal,
Bless,
Resurrect,
Etc.
However there would need to be a cost for these, and as magic is made more mysterious the rarer it is, the cost needs tone high.
Paying half a dozen artefacts, and 20 gold bars for a resurrect should make people stop and think first! It should really be a tough decision to make so magic does they spammed.
Then I thought more on this with a view to the Arcane.
Again it needs to be very rare, with a extortionate cost to maintain.
So I thought of a visiting noble classed as Mage, who can arrive at a certain point, and as long as his intricate wizardly requirements and needs are pandered to, he will stay and help the fort, fail to look after him, and he leaves for another fort.
This way magic is kept rare ( only one Mage per fort max) and expensive, (regular demands of difficult and expensive items)
Maybe these thoughts would help put the right flavour and feel to magic in the DF world?