You could also make the spell not require the towers except for the forge, move them to different magic techs, and and make them wonders. That way instead of just taking up time and delaying an automatic win the towers would be late game boosts to Mana production players would be rushing to build them before the others to secure the most mana. Thus adding an additional layer of strategy.
I like the idea of changing the Towers of the Padars/Witch/Sword/Something Else into wonders, since I feel that the Civilization tree has too many of the current wonders, and many of those do not make sense as wonders (what, because I built a treasury first no one else can?), while the special towers make more sense to me as Wonders of the World than as one-per-faction structures. I think the Forge of the Overlord would make sense as a wonder, as well, but then there's the issue of how to deal with multiple players going for a Magic Victory, since if you make the Forge a wonder you essentially force either a Conquest or a King of the Hill victory type (King of the Hill wouldn't be bad, but Conquest would be, and anyone who requires a certain building for a specific victory condition would be likely to put it someplace where you'd be required to fight through most or all of their territory to take it - which is essentially a conquest victory - unless it becomes a capturable resource or part of an initially neutral capturable city to prevent players from moving it).
However, I'm somewhat on the fence about this, because as BernieTime said, it's essentially the escape button for when a Conquest Victory would take more time than you want to put into the game, and if it requires one or more wonders it is possible that none of the wonders will be available by the time you decide you want to cast the Spell of Making, especially if you make the decision relatively late in the game and several other players have decided to attempt a magic victory. Though if you're using it as the escape button for Conquest, you're probably in a position to just take one or more of the wonders, unless the reason why you want to take the Magic Victory is that you've begun to lose.
As far as the quest victory goes, I think it's alright as it is - but since it can still spawn even if the Quest Victory is disabled, it would be nice if there were some obvious benefit to completing it, aside from completing the disabled quest victory. Otherwise, it's just using up space on the map that could have been a more interesting Wildland, or empty space for expansion. Perhaps all the key pieces you mentioned could be parts to create a Staff of Dragon-control or something like that, or an ability to train dragons at will (though at high cost in time and resources) from a city where you build a special 'dragon breeding grounds' (perhaps on a resource spawned in the Pit of Lost Voices), when you complete the quest? The quest flavor text suggests that you've gained something that allows you to sense (and possibly control) dragons, but you don't gain anything from completing the quest unless quest victory was on.
I agree that this needs work, especially when it comes to getting into and out of alliances. It would help if alliances were useful for much more than 'at least I don't need to bother conquering these guys on my way to world domination'.
I'm not so sure of adding a Sovereign's Council building as a requirement for a diplomatic victory, though. Just because I built something that I call a Sovereign's Council doesn't mean that any other sovereign is willing to participate in it, and a unilateral move on my part to make such a Council might tick other leaders off a fair amount. I'd sooner see a diplomatic victory attained by having (whether through alliances or through your own faction's power) enough 'strength' by whatever metric you choose to dominate the world (not necessarily conquer it, though - pre-World War I Germany is a good example of a nation which had the power to dominate, but not conquer, its neighbors and by doing so attain its diplomatic goals, while the Allies of the same time period are a good example of an alliance with the ability to dominate their part of the world). Moreover, permanent councils consisting of most or all nations of the world are relatively new, and don't have the greatest rate of success in assuring peace or united actions (see League of Nations, or any incident in which one member or another of the UN Security Council has made use of their veto power). It's something that I could see as useful as a step on the road to the diplomatic victory, but not as something which is necessary. Moreover, there exists the issue of getting other nations to agree to be part of it.
That in itself could be a decent diplomatic victory condition, though, and something that could allow alliances to become available earlier. Not everyone needs to be in an alliance with you, but to win a diplomatic victory you need to get everyone to agree to be in some sort of Council of Nations or Sovereign's Council or whatever, and perhaps require that some amount of time go by with no wars to finish the diplomatic victory.
Possibly a Sovereign's Council building could be unlocked by a tech, but could only be built after getting most or all the other sovereigns to agree to be in the Council, and perhaps have some method of in-game voting to determine where the council gets to be built (I could do without the 'vote', though, since I'm not really sure what would make sense for that).
In fact, looking at this, it might make sense to have two variants of the Diplomatic Victory:
1. Alliance/Pseudo-Conquest Victory: be part of an alliance with the most power in the world (or be the single most powerful faction), with a total alliance (or faction) power not less than some percentage of the total world power.
2. Diplomatic Victory: convince all surviving sovereigns to join in a Council of Nations or Sovereign's Council, maintain world peace for some amount of time, and perhaps have some sort of headquarters for the Council that could be built after (almost) everyone agrees to be part of it. Maybe also have the headquarters be a one-per-faction building and make everyone have to build one for the victory condition (with part of the treaty for council membership making the AI build it at the highest priority, if they agree to become part of the Council, because otherwise there would be no point to having this requirement since it would take too long).