I would suggest a combination, carve out the mountain, and add to it where you need to (building observation decks ect).
Though I guess its more of a challenge to force yourself to work with the layout of the existing cliffs.
but yeah, weaponising an entire mountain would be the single most dwarfy thing ever... I guess having fortifications carved all around it, drafting every dwarf into a crossbow millitia at any sign of trouble would equal a mountain that spits bolts. plenty of cave-in traps prepped at chokepoints would give the impression of the mountain itself attacking invaders, and giving it the ability to erupt magma at various parts of the surface is a must... you know the drill.