Rather than add it to the already-cluttered Alchemy window, though, perhaps there should be a new item. A Tinkerer's Toolkit. Use in-hand to produce pellets. Maybe the recipes available are based on the Firearms skill.
1: Grind a stone for 10 pellets.
1: Carve a torch into a handful of wooden pellets. (Perhaps a slight damage penalty?)
3: Apply herbs to pellets for elemental effect?
4:
But if I could turn my 20 rocks and 20 torches in to 400 spare ammo. . . well, that might be just dandy.