Whether alchemy was proto-chemistry or spiritual discipline is the central interpretive dispute in the field, and the answer that has emerged from recent scholarship is that the question was badly posed.
The spiritual reading dominated the twentieth century. Carl Jung treated the alchemical corpus as a projection of psychic processes, the operations on matter as an unrecognised description of individuation, the nigredo as the confrontation with the shadow, the coniunctio as the integration of opposites. Psychology and Alchemy of 1944 is the influential statement, and it made alchemy interesting to a large audience who had no interest in furnaces. Mircea Eliade and others read it as a religious technology of transformation.
The laboratory reading has since been reasserted with considerable force by historians of science, principally Lawrence Principe and William Newman, who did something obvious that nobody had done: they took obscure alchemical recipes, decoded the cover names, and ran them, obtaining the described results, including the Philosophers' Tree, a dendritic growth of silver amalgam that a text describes and that had been assumed to be allegory. Their conclusion is that a great many passages taken as spiritual allegory are operational instructions, and that the sharp distinction between alchemy and chemistry is a construction of the eighteenth century, made when chemistry wanted respectability. The historical term for the whole field, they note, was chymistry, covering both.
The best-supported position now is that the tradition contained both strands and that many practitioners held both at once without difficulty, since a cosmos in which matter and spirit are continuous does not require the distinction. Isaac Newton, who wrote more on alchemy than on physics, is the standing evidence that a first-rate experimentalist saw no conflict.
Spiritual alchemy as a self-conscious separate discipline is largely a modern development.