I think the ideal way to use TNT is place it in the center of a 3x3x3 block room, suspended on dirt or something with low blast resist. It'll expand the room to roughly 5x5x5. You can do this again to expand to 7x7x7 So basically you're getting ~250 blocks removed per 2 TNT. A mob spawner/farm can produce 100 or more gunpowder in 10 minutes. Rails are more easily found in mine shafts than crafted. Dump water instead of pickaxing them.

This is from personal experience, I'm not sure what the ideal strategies are in newer versions of the game.