I've been working on a dumping coal mine for my layout. My first design (old drill bit and a hackjob metal tunnel) didn't work too well. Between the iffy tolerances and the ground-up sprues I used as coal, it kept jamming up. I've since torn it all apart, and I'm redesigning it.
It sort of worked though: http://www.youtube.com/watch?v=3p08Jte_dCw (Skip to about half way through to see it run.) There was a video of a working rotary dumper in N, but the user took it down for some reason; here's one in HO. http://www.youtube.com/watch?v=-zgnCG8a6fA&feature=related
The mechanism will take a little tinkering, but with enough parts and a willingness to hack stuff to bits, chances are you could get one working. There was a plan in a Model Railroader several years ago to make an animated water tower, basically using a switch machine to lift and lower a boom. That machine could just as easily open and close a hatch or something to dump coal through.
The problem with live loads, especially at this scale, is that they get everywhere if you have a derailment (or a poorly designed mechanism). It's not a fatal flaw, just something to keep an eye on (and a good reason not to use conductive/magnetic/abrasive stuff that'll get sucked into other mechanisms as your load).
Logs might be a good place to go, they're big enough to be obvious if they're spilled, and they'd be fairly easy to handle. You'd probably need to add some weight, though, for a gravity feed thing, or use cast metal logs. (Of course, then you could use magnets in the cars or loading equipment.)
Animation can be tough at small scale, but if this guy http://www.youtube.com/user/jdk1928 can do the crazy stuff he does, there's no reason we can't make N haul live loads.Edit: http://www.youtube.com/user/jdk1928#p/u/9/_SIOhhAs6cI Here's a vid showing several of the guy's projects. Maybe something like this http://www.youtube.com/user/jdk1928#p/u/13/GXmZ8xXk6JQ would fit your animation bill.
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