So one of the criticisms of OS 1 was that the story was kinda weak, and there weren't memorable characters, something Larian seems commited to improve upon.
But the dialogue by the player character, as is, is amazingly bad. It's not dialogue AT ALL. One of the things that got me to jump into early access was the impression that the PCs dialogue options were placeholders and would be replaced further in development. Evidently, that's not the case, and this absurd 2nd person set of summaries is what we're supposed to connect with.
Look guys. That's not gonna happen. PCs need to be things players can project upon OR genuine, interesting characters in their own right. The best way to summarize the current system is like the Dragon Age/Mass Effect dialogue wheel, if Shep/Hawke/Inquis didn't actually deliver a line upon selecting the option. You just pick a second person summary and the other person responds like you actually said something. It's ludicrous; the core of writing is "show, don't tell" and this system is ENTIRELY tell. It's just summaries. That's not compelling, and that can't evoke emotion. It's just bad.
Apart from gutting it and replacing it with a normal dialogue system, I can think of one viable solution to make this a game with a story people can care about. Have the VOICED dialogue be asynchronous with the text options you select. In other words, let our characters have their own personalities, dictated by the tag system, and let that uniqueness be displayed in how they express the options we select. So, if a "dialogue" options reads
*tell him you don't appreciate his behavior*
and you select it, have the red prince's spoken dialogue be significantly different from, say, Sebille's. Same selection choice for the player, but Sebille expresses it her own way, with a different line and delivery, compared to the red prince, since they have different personalities.
So one might say "That was uncalled for..." while the other says "disrespect me that way again and i'll show you your own entrails!"
Real dialogue. Which means real conversations, which means real humor and emotion can be conveyed. Also allows for a ton of replayability, since even the same options will feel different on different characters.