Yeah, the current system needs work and it's not "good enough". It is playable though.
All I really think needs to be added is:
1. Notification a conversation has been started(as well as button/hotkey to open it).
2. Allow co-op decisions to be integrated into the same interface.
3. Fix the multi-conversation issue Tyhan mentioned above.
4. Optionally allow viewing "mundane" conversation the same way (although still keep these convos out of the journal, they'd just clutter it up).