Just dropping in again to report on our 4 player game on Saturday. For the most part, it went great, we played for 7 hours straight and we had a blast. The only problem we ran into were a few crashes during quicksave and autosaves. I have a feeling that this was due to the host (me) playing on a pretty low spec laptop. My only suggestion is that the host player use the beefiest rig of the group.
Other than that, it was an awesome experience. Dialog was fine, the only thing that the 2nd pair could not do was participate in the dialog banter mechanic, but that actually doesn't happen all that often and nobody really cared anyway. They could initiate any other kind of dialog that they wanted, including trade.
Most of the time we were all in different places exploring the world and even getting into our own fights. It all felt like a mini-mmo, but much cooler. We used Google hangout to communicate while we played and it was hard to get a word in because every couple seconds you'd hear, "hey look what I found!...I'm getting attacked, someone help!...I found a secret dungeon!...Hey a neat two handed sword, anyone want it !?". It was fun, but it almost felt a little too overwhelming. This game feels huge playing alone, but with 4 players it just quadruples the information overload.
Overall: great experience, I highly recommend it. The enjoyment far outweighed any tiny limitations.