Lava Entrance

Not very well written, but I hope it gets the point across...

The Lava will hide the shaft, and can be used as a light source/decoration.

Falling through the water will put out the fire, slow you down a little bit, and dilutes the light from the lava above.

I suggest a pool of water at the bottom of the pit, otherwise you'll crack your shins.

New Info:

Doing experiments, here's some data. (Single Player, Easy)
Jumping in from the same level - 4.5 hearts
From 1 block above - Strangely enough, 6 hearts. I guess the fire hits early?
From 2 block above - 2 hearts
From 3 block above - 2.5 hearts
From 4 block above - 4.5 hearts


Optimal placement of the lava appears to be 2 blocks below your jump point.

As for getting out, I can suggest a long tunnel out, Building a Portal down there and riding away through the Nether to an exit, or a tunnel filled with water, like an elevator. It could come out through a pond in a castle.

Yay Mojang! Yay Notch!