Well one of the recent updates is that fire no longer infinitely burns so you can't have a fireplace anyway.
When it did work, it was possible (may be not guaranteed ) to have a fireplace in a wood building. It's just that the fire could spread more than you thought. Before I put a fireplace in my real house, I made a mock one outside. Sure enough, some caught flame. I don't know the exact details but as you add stone blocks you could get it to not catch wood on fire. Like start by covering all adjacent blocks with stone, including diagonal ones, on all sides.