In reactive bimetallic compounds such as Ni–Al multilayers, desirable thermo-kinetic properties upon ignition require simultaneously controlled geometric microstructure and material composition. This article establishes fundamental dynamical models of plastic deformation and material diffusion in ball milling processing of particulates from Ni and Al powders, for the purpose of designing and implementing feedback control strategies for process control. The role of heat dissipation from plastic yield and friction slip in affecting compressibility and diffusivity of the material is elucidated. The different sensitivity of compressibility and diffusivity to thermal power is exploited by introducing multivariable control of both bilayer thickness and penetration depth simultaneously, using a real-time computational model as an observer with adaptation informed by infrared measurements of external vial temperature. The proposed control scheme is tested on a laboratory low-energy ball milling system and demonstrated to effectively modulate power intensity and process duration to obtain the desired microstructure and material composition.