The results of any spell could be good like turning a bar of steel into adamantine, bad like throwing a fireball accidentally inside your fortress (though the wizard should be able to extinguish this somehow), or neither like bringing the corpse of a dead raccoon back to life. In any of these circumstances the player should not be given much indication to the end result.
I'd really object to just flat classifying a spells as "good" or "bad" as I feel that's not the point of DF. Good and bad are just subjective. Sometimes your dwarves are good, helping rid the landscape of evil critters, sometimes your dwarvese ARE the bad guys, slaughtering humans/elves/dwarves by the 100's.
Like I posted above, I think that whether a spell is good or bad should depend on the player and the game. I don't think there shoudl be any universally good spells (like converting steel into adamantine) nor universal bad spells (throwing fireballs at friendlies).
Instead, it should depend on context. So perhaps instead of converting steel into admantine all day long, he converts other martials into iron. Great if you have surplus of copper or nickle. Not so much if he's converting platinum, gold, or even already polished steel back into iron again.
It has it's plusses and minusses inherent to it. Perhaps his mood will effect things, but I think it'd be fun and FUN to try and prevent your crazy wizard from entering your steel stockpile with his crazy "iron touch" but instead trying to redirect him to your buttload of copper stockpile.
As for the fireballs, having him on the ramparts throwing fireballs at invading goblins woudl be great. Having him chuck a fireball at a kobold thief sneaking around your booze stockpiles...not so much.
I think that makes it more random and wonderfully fun, turning the positives into the negatives and the negatives into the positives.
One dwarf's invading army is another dwarf's wandering iron deposit.