Traditional alchemy was a protoscience that combined chemistry, physics, metallurgy, medicine, astrology, mysticism, and religion. At a fundamental practical level, alchemy was pure research, involving the combination of different materials and chemicals and studying the results. In this sense it was one of the first true sciences, for the fact that alchemists preferred to test their theories and hypotheses for themselves, rather than take the word of an authority such as the Church.
The science of alchymy I like very well, and indeed, 'tis the philosophy of the ancients. I like it not only for the profits it brings in melting metals, in decocting, preparing, extracting and distilling herbs, roots; I like it also for the sake of the allegory and secret signification, which is exceedingly fine, touching the resurrection of the dead at the last day. —Martin Luther's Table Talk
Most alchemists were seeking the philosopher's stone, with the generally accepted theory that a final substance (or 'stone') would be created out of a series of chemical reactions, and the final result would be a substance powerful enough to transmute one substance into another. Commonly the intention was to change lead—the most base metal—into gold, which was considered the ultimate metal. Not incidentally, most patrons were also interested in an easy creation of gold, and thus bankrolled their personal alchemists in hopes that they would be the first to have access to the alchemist's final success.
Of course, success never happened, but alchemists discovered a number of early chemical facts along the way. And a few probably blew up their labs in the meantime, but alchemy generally consisted of actions such as 'mix two pounds of saltpeter with one pound of sulfur, then boil until something happens.' Whether the resulting substance was inert, poisonous, or explosive, the alchemist noted this and continued with a different set of metals or chemicals.
The alchemical operation consisted essentially in separating the prima materia, the so-called chaos, into the active principle, the soul, and the passive principle, the body, which were then reunited in personified form in the coniunctio or 'chymical marriage'... the ritual cohabitation of Sol and Luna. —C.G. Jung, Mysterium Coniunctionis
Today, alchemy is considered a pseudoscience, in that it operates based on a faulty assumption; that is, that a chemically-produced substance could alter another substance at the molecular level. However, alchemy was often treated as a metaphor, or process, that could be applied to all aspects of life, and not just in a chemical sense. These days, alchemy is often considered a mystical or philosophical branch of study, where the substance in the crucible is not sulfur and mercury, but the person's experiences and psyche.
In chapter 10 of the manga, Edward and Alphonse are decoding another alchemist's research. Edward explains to one of their military escorts the purpose and value of coding their research. (Alphonse comments that he finds it easiest to decode research constructed on the pattern of a culinary recipe, noting that some say alchemy was 'born from the kitchen.')
Most of the early alchemists' texts are encoded for the same reasons. For the most part, no one wanted their notes to be decipherable if they fell into the wrong hands. In this case, 'the wrong hands' could be both alchemical competitors, or the Church. And it could also be the alchemist's patron, who might wish to determine for himself (or herself) just what the alchemist was up to. Many of the alchemical texts that survive are couched in poetry and pictures, with a heavy use of metaphor, both religious and mythological. From a more cynical point of view, alchemical studies were utter failures when it came to achieving the philosopher's stone, but that was the last thing an alchemist wanted anyone to discover.
Conclusion: FMA is right on target with traditional alchemical research practices. Additional information at the Alchemy Web Site, R.W. Councell Apollogia Alchymiae, transcribed from text published in 1925.
In chapters 1-13 of the manga, and 16 episodes of the anime, not once has Edward (or any other alchemist) transformed one object into a different object not made of the same chemical or molecular properties as the first. Even when Edward 'creates' gold, he does so not by creating gold, but by reshaping coal into ingots and covering it with gold. By the end of the episode, the false gold is revealed as such. Alphonse explains that he cannot create a larger radio with the parts of a smaller radio, and even the walking statues in Liore (or Riore) are made from the stone of the destroyed building.
Traditional alchemy, in contrast, was not concerned with the Laws of Conservation, which were a discovery off in the future, at that time. Most of the alchemical discoveries were, in fact, re-discoveries of scientific facts lost during the Dark Ages. Alchemists were not concerned with whether they observed a law of equivalent trade; the notion didn't even really exist at the time.
Conclusion: The emphasis on a Law of Conservation fits the scientific mindset that pervaded alchemy, even if it uses a concept that's common now more than then. This underlines the mangaka's interpretation of Alchemy as a 'science', even if it's not entirely accurate to the traditional.
In several of the anime episodes, the Philosopher's Stone is referred to as an entity with a variety of names, fitting the fact that it has a variety of possible appearances: liquid when bottled, solid when exposed to the air. There are a number of chemicals that have odd properties, which fascinated alchemists. Mercury was a favorite, for its solid yet liquid tendencies, for instance. The Philosopher's Stone was often gived coded names, as well, both to protect the writer's research and to protect the alchemist from threats from the Church.
However, the original Alchemists did not use human souls, dead bodies, pregnant women, or small furry animals to create the stone. They were interested in chemicals, and exploring the chemical properties of substances. There are alchemical texts that speak of adding hair, fingernail clippings, fur, feathers, bones, and other such items, usually on the theory that such substances might have their own chemical properties that would add something to the reaction. In some ways, they might: fingernails retain potassium, and potash is a major ingredient in lye, a corrosive chemical.
But when alchemy is taken from its mystical, philosophical point of view, then the addition of a human soul becomes the major basis of the equation. When the alchemists began to apply this "throw it into the crucible, burn off the bad, and find the pure results" to his own psyche, then yes, one could say that a human soul became part of the philosopher's stone, if the stone is a metaphor for that which transforms a base, material-oriented person into an enlightened being.
Conclusion: if FMA takes the route that 'human souls' or 'deaths' is a metaphor for the final product (and not an actual ingredient), then it's closer to alchemy as a philosophical course of study. But there's nothing wrong with artistic license, and it does make for a better story if there's the risk that someone might die.
One theme running through FMA—and no coincidence, probably, that it was introduced in both the first chapter of the manga as well as the first episode of the anime—is the issue of alchemy/science versus faith/religion. Because the original alchemists were operating at a time when the Western/European world was slowly crawling out from the shadow of the Dark Ages, they had to contend with an extremely strong Church that wanted its subjects to, well, remain subject. Alchemists threatened that strength, by preferring to discover for themselves, rather than sit back and wait for a diety to grant them the knowledge or ability.
Most of the early scientific practices rooted in alchemy are based on the belief that one must taste, touch, see, feel, hear and smell a tangible result—and be able to duplicate it—rather than take the results for granted. As the Church's tendency was to tell the unwashed masses to 'trust in God,' the alchemists who preferred to find out for themselves were practicing and preaching a dangerous concept.
Much of the mystical, hermetic, and gnostic traditions interwoven with philosophical-type alchemy stem from this insistence that one experience the results for oneself. Gnosticism, with its insistence on self-knowledge of the divine, dovetails in some ways with alchemical thought processes.
A mystic and an alchemist are partially overlapping sets, neither mutually exclusive nor inclusive. A mystic seeks connection to the transcendent (a diety, usually) and may or may not seek self-transformation. An alchemist's priority is self-transformation, and may or may not use a connection to the transcendent as the means to do so. It's a sweeping generalization in both cases, but enough to explain the similiarities and differences.
Conclusion: FMA is using the historical tension between the medieval Christian Church and alchemists, and raising the same questions raised then.
Hohenheim Elric, Edward and Alphone's father, gets his name from a town in Germany. It's also the surname of Philippus Aureolus Theophrastus Bombastus von Hohenheim, more often referred to as Theophrastus von Hohenheim, an alchemist with the penname of Paracelsus. Von Hohenheim, on its own, is the equivalent of calling oneself something like Jack of London. However, it indicates Arakawa spent at least some time digging through introductory alchemical histories or texts, that he would chose such a name for the boys' father.
"Paracelsus was a medical reformer who introduced a new concept of disease and the use of chemical medicines. He studied at several Italian universities and began to practice medicine and surgery in the 1520s. A difficult personality, he created controversy because of his wholesale condemnation of traditional science and medicine. He never obtained a secure academic position or permanent employment.
Paracelsus's new concept of disease emphasized its causes to be external agents that attack the body, contrary to the traditional idea of disease as an internal upset of the balance of the body's humors (yellow bile, black bile, blood and phlegm). Therapy, according to Paracelsus, was to be directed against these agents of disease, and for this he advocated the use of chemicals rather than herbs. Alchemy became the means of preparing such chemicals; in this way Paracelsus changed the emphasis of the alchemical art from chasing the elusive Elixir of Life or Philosopher's Stone, to making medicines."