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I think my alchemist leans a little more towards the sorcery side of things..
The idea is the little capsules are filled with unrefined elemental compounds which he can bust open and transmute stuff using the alchemy seal on his hands. Stuff he could transmute would include boulders spiking out of the ground, jagged shards of metal, teapots, etc. He could probably transmute fire as well but I think it would react more like a gas explosion than a flamethrower.