stellar wind across a heavenly sphere

I've started work on a script for a fantasy film, and I need to come up with a system of magic. I'm a showman, so it's easy for me to invent the stagecraft - what someone has to do to make things happen. But when it comes to questions of what magic can and can't manage, I'm hopeless. I'm a science fiction girl and always have been. I start thinking about what's possible and immediately run into conservation of energy issues. If a write a character who can levitate something with his mind, I conclude that there is a force acting over a distance, most likely as a wave rather than a particle, or else that the character can somehow manipulate the curvature of space. This kind of thing is all very awesome, but not remotely mystical. My partner on the project is in a similar bind, in that his background is mainly superheroes - systems where everyone has powers that are totally different from everyone else's, with no need for consistency or agreement.

Note how I'm not going into detail on the film idea, which is perhaps a little obnoxious, but if I started writing I'd have to write a lot. I will say this: it's steampunk, the magic system has to do with water, it's not on Earth, there are elements of Ruritania, the main character is a rake, her squire is a refugee, and in contrast to fantasy's pastoral tradition, the setting is urban and unsanitized. There is so much magnificence I giggle every time I think about it. There are hot air balloons! War crimes! Pirates! Natural disasters! It's like what would happen if Martin Scorsese joined Studio Ghibli.

All of this is a roundabout way of asking an abstract question, which is: what, to you, makes magic magical? What makes it seem mechanical? Mushy? Can you think of a book, movie, or game which you thought used magic particularly well or badly? Magic that felt like magic? Maybe even magic you think you could do, or have done - magic you can believe?