So, Engravings. 90% of what I'm thinking here is importance.
How do you determine what is important enough to engrave.
Obviously art is art. That means symbols and non-historical events.
Art history on the other hand, has a few interesting bits. The first is Greek and Roman mythology. Basically painting legends from early in history. These would be important things that happened a long time ago, but a significant portion of their fame is due to their being so commonly done. Everybody has done a Madonna and Child. It's expected, and to the point that Madonna and Child has almost become a symbol in it's own right.
Second, Fame art. Portraits of people, pictures of people in famous scenes (Birth of Christ with modern religous figures standing around), basically commissioned work with modern figures involved.
Finally, Propaganda Art. Modern Obama pictures are good examples of this, as is the Che pics on everybody's shirt.
Now, the suggestion bit: How does a dwarf determine what to engrave, and what variables should there be?
1: Obviously preferences and personal experiance. Scared by a demon? Paint demons (or angels). Scared of rats in general? Paint rats (or cats). Like circles? You get the picture.
2: More obscure preferences. Demons are in the evil sphere. Art Demons could be surrounded by other evil sphere objects, or even just use the sphere objects as an allusion.
3: Events (this is the big one). Dwarves currently pull events from anywhere in the histories, with some obscure preferences governing what they actually pick. When was the last time a truly great work of art was of the time your friend Joe stubbed his toe? There could be a whole algorythm for determining how important an event is. The problem is, it's self feeding, and I doubt anybody wants to have to write a dif eq to describe how important legends are.
The simple version is to assign importance to people based on the importance of the events associated with them, and events based on a raw number plus the importance of the people associated with them. Slaying a troll is cool, but a troll slain by Bob the slayer of Trolls might be something to paint on your kids wall. (St. George, anyone?).
4: Character Insertion. This is a picture depicting the slaying of Urbalg the dragon in 54 by Cog McDragonslayer. Urist O'Mayor has been engraved in the role of Cog.
5: Importance feedback loops. The more something gets used as inspiration, the more it will be used as inspiration. (It's less what you paint than it is how you paint it. You can't come up with a new Trope, but you can apply a group of them in interesting ways).
6: Importance is important, but so is novel. Look, I know Money painted dozens of GD paintings of that stupid bridge over the waterlillies, but if I see one more elephant striking down a dwarf, I'm going to screa,
7: Record books for the record keepers. How many barrels of oil did they have? Some events are important in conglamoration, but not for art. Unless it's a bumper crop, commemorating the harvest is a job best suited for the record halls. This is a lesser form of the ubiquitous 'Players select tone of engravings'
8: Monuments: This is an engraving of dwarves fighting goblins. It represents the battle of... Below it are carved the names of the 12 dwarves who died in this battle
9: Striking down? How hard would it be to include verbage with the creature raws? Elephants trample, Lions maul, and goblins run through. Would make engravings of succubi way better, too.