Don't worry about all this: you can play IWD for IWD-HoW(with or without TotLM) quite well.
One thing is certain: you will not miss dialogues. Ever. (The only way you may miss dialogues is if your party members are going to be dead half the time, and it's not going to happen, of course).
What the readme means to say:
- if Teri is in one end of the dungeon, and Severn is in another, their conversation will happen as soon as they return to the same room(same screen, roughly);
- if Nella is battling Yuan-Ti, she will talk to you after the battle is over, and you see no enemies;
- if your party is moving through the area non-stop, Korin will talk to Holvir as soon as you stop the party.
These are just examples. But, yes, everything's going to be fine. And, yes, the mod's got a lot of dialogue and interjections for TotLM. I hope you won't be disappointed.
(IWD-in-BG2 conversion is not ready yet, so I'd just go and play simple IWD-HoW-TotLM with IWD NPC and Widescreen mod(if you need it) - it'll work, promise).