A stove style insert with a metal flue extending up the chimney will give all of the benefits of the fireplace while not causing the fire hazard. Depending upon type of insert, it can also be more efficient than a regular fireplace.
There are also systems where a bladder is infalted in the chimney and new mortar is pumped around it.  This Old House used this system on a number of projects.
The concrete injection is very expensive.  
A steel liner is more affordable.
I have thought a lot about the loss of basic skills as being discussed here.  I am "skilled" in many ways--carpenter, good at lots of things--but my "skills" are largely mute absent the grid.  
my "skills" are largely mute absent the grid.

It's "moot".

http://www.thefreedictionary.com/moot

Sorry. I couldn't help it.

Jack

Yup, and add to that insulating sleeve around the metal flue.  The fireplace by itself won't add much net heat to the house (too much draft), but a good wood stove (including the type that inserts into the fireplace) is wonderful to have, especially when the grid is unreliable...
We purchased a new high efficiency soapstone wood stove model this year.  Uses secondary air.  My guess is this is a combination gasification (reduced primary air) and mixing air with gases to complete combustion. We use less wood and find more uniform heat in our home.  I know high efficiency stoves are all that are allowed to be sold (at least here) but I'm very impressed that they indeed do as advertized.