I could go with the standard, "display text box and press a button to advance" style dialogue, but maybe making a more dynamic-feeling dialogue system could be fun, where people might talk in the background and you can eavesdrop on them without actually introducing yourself. Are there any games that do something like that in a way that feels natural?
Well, a lot of games do dynamic dialogue systems well. I know a lot of people like Mass Effect's, though I've never played the game. Bethesda games are nice too (I would prefer them to the wheel, as they provide more space for text). Don't know about the eavesdropping, probably just have smaller text boxes pop up in the direction of the person (Or people) that you overhear.
I'm adding new functionality to functions. Certain events in the function menu work as "commands" that are executed over a period of time, like "walk to a point"; these events override the normal behavior of sprites and cause the script to automatically wait until they are complete before progressing to the next event, although you can tell them not to wait by clicking the "Continue immediately" option. Relative positions and orientations for walking (for instance, "walk forward 32 pixels") are planned but not active yet.
This seems like it could be fun when you implement the fighting systems. Seems like with some work you could make enemies and such have more extravagant attacks.