Ironically, some of the most respected authorities in Taoist alchemy have come from what is called the "Extreme Reality School." This school had a sense very similar to that of dead's sifu — that the essence of Taoism was ethics and psychology, not magic or metaphysics, and that all the metaphysics, hocus pocus and mumbo jumbo are actually coded allegory, akin to the fantasies of Chuang tzu.
One major alchemical writer was Chang Po-tuan, eleventh century "master" of the occult discipline of alchemy. He wrote several treatises on the subject, including "The Inner Teachings of Taoism" (also called "Four Hundred Words on the Gold Elixir"). Ostensively, these works are about rendering the gold elixir by means of a firing process; esoterically, these works describe the process of self-actualization by means of reconciling one's passivity (what Freud might call the "pleasure principle," what the Taoists call "yin") with one's impetus to action (Freud's "reality principle," or "yang").
The nineteenth century commentator, Liu I-Ming, went to great lengths to explain, clearly and concisely, the allegory behind the alchemical teachings. This was important, and in many ways couldn't have come too soon; while Frater 219 is right in crediting alchemy as the foundation of Chinese medicine and the art of feng shui, it's also worth noting that many people, including some emperors, poisoned themselves to death imbibing alchemical concoctions which they believed would literally bring them immortality. Liu made explicit what was mostly implicit in Chang's texts — the formulas weren't literal formulas, they were psychological insights, recorded wisdom to be reflected upon as allegory.
In a way, then, Taoist alchemy can be considered one of the biggest mistakes of Taoist stylistics. As a trope, it failed because it didn't sufficiently deconstruct in the minds of the superstitious or gullible. Nobody ever died misinterpreting Chuang tzu. In another way, though, the alchemical writings are invaluable, as they are, to those aware of the deeper meanings, the greatest elucidation of practical Taoism that have ever been formulated. They provide the basis for a strong model of adult developmental psychology, of self-actualization, which is remarkably universal even when it's obscured.
The alchemical writings are probably not the best introduction to Taoism, but they are a key corpus of companion texts to any devoted student of the philosophy.