I won't speak to Chicago in 1871 - looking for an authority to help here!!!

In answer to your second question: yes, this was extremely common when dealing with a fast-moving urban fire. I have spent a lot of time studying the "Great Fire of October 26, 1876" in Virginia City, Nevada.

High winds in anticipation of the first Sierra winter storm of the season combined with a toppled lamp to turn an early-morning boardinghouse fire into a massive conflagration that destroyed millions of dollars of property and left thousands homeless ... just in time for 2 feet of snow to fall on the homeless that evening. Fire crews raced after the fire. People moved furniture out of buildings on one street, believing they had escaped the fire, only to see the next block and everything in its path consumed.

Despite the best efforts of fire crews, the fire continued to spread and grow. High winds sent charred paper to Fort Churchill over ten miles downwind. And it was in part because of the high winds that people decided that it was necessary to blow up buildings.

One of the more famous of these was the enormous Piper's Opera House. Had the all-wooden structure ignited, burning wooden shingles from its roof, four stories above the street below, would have spread the fire farther. Instead, by blowing up the structure, the heap of debris served as an attempt to create a fire break. The debris might burn, but it would be lower to the ground and because it was a heap, it would take much longer to burn, preventing at least some of the explosive fire tornadoes that were forming in the wake of wind, fire and the scorching heat of the flames.

Other buildings were also dynamited, but the most controversial in modern folklore is the fate of St. Mary in the Mountains Catholic church. The massive masonry building was newly completed and its wooden spire was one of the tallest structures in the community. Had that wood caught fire, it could have spewed burning debris for miles downhill, threatening the enormous mills that operated down the valley, threatening the very livelihood of the community.

Today, there is a common insistence that blowing up the church would have been too sacrilegious, and the mere act doesn't make much sense from a modern perspective (hence your very good question). But in the context of the time, blowing up buildings for fire breaks was a perfectly reasonable approach. In fact, a look at the extent of the fire in Virginia City demonstrates that the destruction of the upper levels of the church effectively prevented the fire from going farther south, and it limited its spread downhill to the east.

An old-timer once showed me a place where someone had drilled into the stone foundation of the church - about 2 feet and in just the diameter of a miner's drill bit. He was part of a crew that was repointing the structure and they filled in the hole - which was still there in the 1960s. He believed it was a hole that was drilled and then abandoned - as unnecessarily low (it was about 4 feet from the ground). The lower levels of the church pre-date the first, and its successor was erected on the stout walls that remained after the explosion and fire. Assuming dynamite was used, it was clearly placed higher than the hole that survived unblasted.

Blowing up the church - and other buildings - doesn't make much sense today with fire trucks that can attack a fire even on the roof of a fairly tall building, but in the context of the 1870s, it was a standard approach.