I finished handling the last personality needs in dwarf mode -- dwarves can swipe and own and wear trinkets again somewhat like they did before, for instance, with the avaricious and extravagant dwarves doing it more than others.
Does this mean that we'll once again have dungeon masters who wear sixteen crowns and twenty capes and not a stitch else?
No, that's more of a status need similar to kings with crowns and such, which Toady has mentioned as not in the game yet.
1. What's the plan for paper-making industry? Will there be multiple types of "paper", like papyrus, large leaves, parchment, velum, hemp, dwarven beard hair fiber paper, plump helmet pulp paper? Will we be able to use paper to make other objects, like paper crafts, paper charms, paper windows or paper armor?
Toady has mentioned papyrus, parchment, and paper in the dev log, so different types of paper are in. I think he mentioned that any cloth plant can be used for paper. There might be paper crafts, but anything else probably isn't on the table for this release.
3. Will it be possible to define a civilization with more than one species? for example, PeanutButter Elves and Jelly Elves that live together in the Sandwich civilization?
No. Toady mentioned previously that this probably is too much work for this release. You could fake it with different castes, though.
with multiracial forts coming into play for the next release, will it be possible to define multiracial entities as well?
It'd be a large rewrite, since the "race" variable for entity definitions is scattered all over the place. I'm going to deal with a lot of those dependencies just to get the multispecies forts running, and we'll see where we are when that work is done. Good fortune would be a full gutting, but I'm going to skip what I can for time. I'm not sure what a multiracial raw def would mean in terms of starting pops. It would be easiest just to split it in half/etc. I guess, though the test myth generator's interweaved stories of various critter origins is a large wrench in this process that might be worth waiting for.
5. Can visitors bring reaction knowledge with them? Let's say I've modded the game to play as goblins instead of dwarves. If a dwarf furnace operator joins my fortress, would he be able to manufacture steel? Conversely, if I'm playing dwarves, will my goblin visitors be able to produce whips and loincloths?
Not yet, no I'm pretty sure. They only bring their arts, values, and ethics right now as far as I remember.