There's an example of a game (in the vid) where they can interrupt the dialogue and have them respond. I think it's Bionic Commando remake and I think that's a nice touch.
My favorite (and quickly becoming the only sort I can tolerate) of npc dialog is where it shows the scene of them speaking with the voice over, but also shows the subtitles and you can skip to the end of the sentence without skipping the whole thing. Now when I play a game with skippable cutscenes that don't do that I have to physically hold myself back from trying to skip it, and if it's unskippable altogether I just get ptsd.
You sound lovely.
I think it depends on the length of the dialogue and its importance to the story. Honesty i find in-game content as books or audio records more practical and "honest" for give key info to the players. At lest in games not centered about dialogue choices.
Owl from Ocarina of Time flashbacks:
“Did you not get the fact that maybe you didn’t not get that but not THAT?” (YES / NO)
Taught me to skip dialogue with B, not A
https://youtu.be/UcLNEU2l0mY?si=cHAAolfBYhmS_7II