And editing doesn't work. Awesome.
Maybe your post is too long, I have the same problem in one of my threads with very long texts.
Good suggestions (and a very readable form), many of them have already been made by others, but the more often they're posted the better. And it's quite useful to have a more complete player perspective than unrelated fragments.
I'd like to add some notes to your gameplay point 1 'Less Looped NPC Chatter':
In D:OS 1 automated dialogs and voiced text display was locally scripted for each NPC. Muting background NPCs during dialog shouldn't be a problem I think. But adjusting the frequency of NPC chatter is absolutely necessary and difficult at the same time if you want to make (voiced) text display and automated dialogs fit the NPCs' visible actions. Therefore, I suppose, there's no global control over these things in D:OS 1 (except the hearing distance of those voices to the position of the camera).
Globally muting NPCs for a defined time would imply that NPCs perform their actions sometimes voiced, sometimes muted and that there's no individual frequency for each NPC. Some characters (vendors for example) might want to attract customers, another character gives commands. A global solution would reduce the experience here. And there would have to be a solution for unique voiced text (mostly of story NPCs): sometimes they would be muted due to their everyday chatter and wouldn't voice this unique text.
--> So the options would be either to except certain NPCs from global muting or to rely on local scripting, as D:OS 1 does. I consider the second option much better for an RPG and an interesting game world but, of course, more laborious.
The reasons for this are obvious: To make the game world both alive and not too noisy would often require more actions for NPCs to compensate the lower degree of NPC acoustic. A game world (designed like D:OS) without sensory input (acoustically or visually, in the last case requiring movement to engage attention and simulate a living world, otherwise it would be received like a picture which would be a specific design choice like in PoE) wouldn't feel alive, but static and inanimate. So NPCs must have more actions or, in some cases, at least show a reason for being so quiet (sleeping, sitting, relaxing, reading...). - So a game world that makes less use of voices has to do a bit more of scripting if it wants to be interesting (unless it has a different aesthetic and overall design). I'd like to see more NPC actions in general (more than D:OS 1 had), telling little stories about theirselves and the game world by interacting with each other, with objects of the game world and by reacting to the player.
Just reading your answer, Stabbey: I wouldn't go without any NPC voices for looping actions. I liked to hear conversations between Esmeralda and Donovan, the drill sergeant shouting commands, the Bellegarettes adoring Bellegar, and probably many players did; it's one of the great aspects of D:OS 1, in my opinion (especially of Classic Version) - it would also add to D:OS 2 I think, provided that the frequency gets significantly reduced and, maybe, that there's a bit more variety of voiced text/automated dialog for NPCs, if possible. Since there's no full voice acting this may not be too costly.