Hello and welcome,
1. How do you have more than two characters in a conversation?
Since all the characters are "objects" (either actors or entities), and talking means just calling their Talk methods from scripts, it doesn't really matter how many characters participate in a conversation. It's only a matter having multiple actors/entities in one scene. Then you simply make them talk in a script:
actor.Talk("Hey guys, how are you?");
Bill.Talk("I'm fine.");
Ted.Talk("I'm not.");
actor.Talk("Oh, I see.");
(providing 'Bill' and 'Ted' are actor/entity object previously loaded into the scene)
2. Will there be a development of the system so that dialogue scripts can be made more readable?
This has been discussed before, indeed. It's a little tricky to find the right balance between making the dialogs easy to write and preserving all the power of scripting at the same time. And since I don't see any way of combining these two, probably the only solution will be to have two separate ways of creating dialogs. A simple one, which could be supported by some GUI tool or some simple syntax (the way you suggested). This method would only support some simple conditions/branching etc. Then there would be the "classical" way, i.e. scripting, which would provide all the scripting power when needed.
Currently only the scripting way is available, although I believe FoveverDreams guys already developed their own simplified dialog system on top of scripting, and ClémentXVII is reseraching possibilities of using XML for writing dialogs.
3. Is it possible to export the dialogue only for recording purposes or for translation purposes? Is it then possible to re-import it so that it slots into the game at the right places? How do you keep track of the lines of dialogue in these instances when there seems to be no numbering of the dialogue lines?
I have developed a tool for this, but I didn't release it to public yet, because it's still quite raw and I'd like to make it a little more user-friendly before releasing it. But it's usable and has been used in two games already.
This tool scans the relevant project files and extracts all strings. It also automatically adds string-table IDs to all of the original strings. So the idea is not to deal with string-tables while developing the game, but only extract everything once the game is finished. All the subsequent changes (proof reading, translations) are only done in the string table and the original texts only work as placeholders.
I can make the tool available, though, if anyone needs it anytime soon.