The thing about working with cinnabar, especially mining it, is that you INHALE mercury.
Inhaling mercury is a hell of a lot worse than ingesting it. By far.
Personally, I think that if mining created dust, and if regular-style dust gave more health and unhappiness issues to non-dwarves than dwarves, than it would provide even more reason/incentive for dwarves to stick underground and other races to stick above-ground; currently, there's no particular reason (or at least not as much) for humans to not live underground, for instance. Dwarves should still get a bit of an unhappy thought, like they do now, but no severe problems unless they're working with toxic materials, and even then, that should be less dangerous than it is to, say, humans/elves.
The problem is how to handle the unhappy thoughts. Obviously a dwarf randomly getting splatted in the face with chalk dust isn't going to like it, but a guy who's been mining the stuff all day won't care. It's like in real life; a miner isn't going to care much if he gets dirty, but a BYSTANDER who gets dirty will get annoyed.
Ideally, the game would lower the magnitude (to the point of nonexistence if applicable) of a negative thought based on whether or not the creature is used to something, and maybe even whether or not it has to do with its current job. For instance, say tanning releases bad smells; someone who's never encountered it will probably vomit, someone who's just starting to work with it or isn't working with it but has encountered it before will probably dislike it but not as strongly, and someone who's been doing it for the past few seasons won't care much anymore. This could probably be simplified to just an "is the creature used to this?" exposure check, which might decrease over time, such that even if you're a miner for a solid year, waiting ten years to mine again might make you unused to it.