I've been mulling over how to best build dialogue in my AM games since the start. AM's dialogue feature isn't that bad, but it is confusing.
In the Nancy Drew games, you choose what YOU as the main character are going to ask or say. The response has always been animated and not return text.
But, what do you envision of how dialogue should work in a game?
I really am not sure what works best. But, I do like the dialogue in the Drew games because it's not confusing. You expect the response to always be an action on the screen.