Yes, I totally agree with you about wood and coal too. Coal was used as fuel for steam locomotives and many ships; but cars and tanks have much compact engine, which also needs more "stable" fuel (or simply to say, refined fuel) for that.
Wood is only used in household for cooking or heat generation, never as as decent industrial fuel (for powering up machineries or electricity) directly.
However, vanilla game just named them all under "chemical" fuel category, and default burners are all set to accept that. Game prototype currently allows one fuel category only to each burner entity, so I cannot do anything to "make it more realistic" without breaking vanilla entities. So I cannot do anything about wood and coal, sadly.
For personal gameplay, I don't even bother with cars and tanks without solid fuel. But I do put coal into locomotives, just like what the people still did 100 years ago. So no realism-breaking after such self-restriction. ;-)
The view on oil fuel in game is two-sided. As what you said, we do not need another overhaul petrochem here, which is too overcomplicated (in my taste). For vanilla style, the vast majority of products are one-step process, except like the end game rocket parts. So it sounds should not have small steps to fit with the vanilla "spirit"?
About making a new recipe for diesel fuel (so now two-step?), I am not sure about this yet. Before discussing that, I have to mention the one of the two-step product first: lubricant. Heavy oil 1:1? I ask myself everytime when I saw that... Devs (over-)simplified the oil processing in late-0.17. So why they not just eliminate this dumb 1:1 recipe also? I don't want to make another dumb recipe like that.
The another two-step product, solid fuel, has very close ingredients to the KS Power diesel fuel. From gameplay viewpoint, the diesel fuel just looks like another solid fuel. (But right, the name gave me the first impression it was an advanced product. But not after seeing its KS Power recipe.)
But I have no chemical-expertise, to know what and how real diesel fuel is made of. Maybe someone can tell me if it is really needing hi-tech to manufacture, and is really of higher quality than solid fuel?