This is what I had in mind for dialogue. The characters should be able to talk through cutscenes in subtitles, and I also believe they should interact more between different characters from different worlds. Kind of like this:
(Scene: Masked Man and Bowser Junior are trying to ambush Lucas and Red the Pokemon Trainer for Ganondorf)
Junior: C'mon, you baby, it's about time you learned how to be useful!
Claus: ...
Junior: What's your problem? You too much of a wuss to kidnap a kid?
Claus: ...
Junior: Wow, no wonder Porky sent you with me, you're such a baby he doesn't want to deal with you!
Claus: ...
Junior: Look at the blonde kid. He looks stupid enough for us to scare him into surrendering. He's almost as much as a baby as you!
Claus: ...that's...it...
Junior: What's that? I can't hear you mumbling about your mommy. Where is she now, huh, shortstop?
Claus: (In tears) ENOUGH! I can deal with having to work under that jerk Porky, having to fight my friends, but when you, you insolent litle turtle, mock my family, I will crush you. TASTE BLADE, KOOPA KID!
(Laser blade hits Bowser Junior in face. Junior gets up and brushes himself off.)
Junior: You're feisty. My papa said I was feisty when I first attacked my enemy. I see a connection we have.
Claus: I'm surprised you can see it over your inflated EGO! (Strikes Junior again)
Junior: You wanna go? Fine, Iet's brawl, ORPHAN.