Dwarves already have magic from the beginning, it's called steel. And there's even stronger magic available eventually... I don't see how some mumbling codgers in funny hats are going to be an improvement (especially since you can't mass-produce them). If dwarves need more magic, let them discover greek fire and black powder.
We already have "greek fire". Though they're commonly called "Demons". Water doesn't even stop the ones on fire. They burn forever! And engulf everything they touch or look at!
We also already have "gunpowder". At least... As long as booze can still explode we do.
I wonder if it would be possible to use one exploding barrel of booze to fling another barrel of booze that could explode somewhere else. You know, like the TNT cannons in Minecraft. Epic.
\Booze does not explode.
I think magic rarity should be determined by the first praticioners: If they are greedy, they will horde it. If they are a bro, he will teach it to everyone.
Magic can lead to some unique combos, I wont dissmiss the idea unless its "LOLINSTAFIXSIEGE".
Booze doesn't explode anymore? Too bad. That could've been awesome.
As for magic... I'm on the fence about it. How would it even be used in the fortress to begin with? Strictly combat? If that's the case, you could likely get a noble (Court Wizard) to show up in order to teach squads how to practice it in combat. Then, instead of assigning varying degrees of magic (like you do with weapons... Bronze, Iron, Steel, etcetera) you would assign a TYPE of magic to practice in combat. Perhaps "healing" Dwarves which could only heal a single dwarf at a time and would not defend themselves if attacked. Perhaps Dwarves that cast elemental/syndrome attacks at varying times of casting (which would make you do the same thing with them that you currently do with Marksdwarves). Cast times could be improved with skill in the art (which you could probably train at something similar to an archery range) or with the right clothing (simple cloth items would allow better movement, so they'd be able to cast faster).
The only other thing I could see doing with magic is perhaps "enchanting". I've wanted "enchanting" for a while, though I know it would likely be pretty overpowered. I'd suggest getting a "Noble" for this as well (perhaps the same court wizard) who would allow you to enchant things with learned spells.
I'd recommend you learn spells by purchasing them through trading. Then you could have your Court Wizard immediately key in on the purchased spell and "consume" it like most dwarves do food or beverage. It would take time to learn said spell, and the item would be consumed upon learning. Or, perhaps a better method would be to make the spells required for a workshop. If you want 10 Flaming Axes... You'd need 10 "Flaming" spells to do the work. Perhaps "masterwork" versions of enchanting would make the enchantments better than they were.
What I wonder is... If we're going to introduce magic... Are the ENEMIES going to have it as well? If so... Elves just got a LOT meaner and worse to fight.