What might be the implications of such an Industrial Revolution, and how might you address these advances?
Well, since you're immediately diving headlong into unscientific postulation because of the inclusion of magic, monsters, and other utterly fantastical elements, how
I would address them depends on the kind of campaign world I want to have. Then I can spout any kind of justification and declare any events needed and desired to explain how that world came to be. The world you're describing seems more like steampunk than heroic fantasy simply because the setting is shifted into an industrialized world. Frankly, I don't think that a "
D&D setting" really can be stretched to that point without first giving up what it is that MADE it D&D. You can use d20-based game mechanics for it but that doesn't make it D&D. It's really not D&D anymore at that point IMO, because D&D is not steampunk. You can use D&D-mechanics-based rules to create that setting and depict that genre, but that doesn't make it D&D. IMO.
But, just some initial brainstorming if I WERE to go that route, I'd consider a setting with a lot of inherent conflict between industries, nations, factions, etc. based on the "engine" that is chosen by certain individuals and groups. I see three basic possibilities.
First is necromancy, where use of animated dead (or perhaps summoned and enslaved supernatural entities like demons or elementals - but mostly just animated dead horses and other animals) is used as a limitless, literally undying power source. [Animate a dead horse, hook it to a mill, and it will then walk in a circle
forever creating free mechanical power for water pumps, but consider the idea of a factory of once-human/elf/orc/halfling skeletons operating textile machinery 24/7/365. Who needs child labor to exploit at that point?] Second is golems and other magically created entities which are far more complex, more complicated, more potentially
free-willed, and VASTLY more expensive to produce - but are generally considered just as vastly more
ethically and morally permissible (assuming they are then put to ethical and moral use). And third, of course, is the strictly physical mechanics of steam power - even though
the means of creating the steam for the engine then has a possibly wide variety of natural and supernatural origins.
That seems like a set of possibilities to build a very interesting campaign world upon. But it wouldn't be much like D&D.