Conversation or dialogue?

What happens when we talk? Words come out of our mouths and are heard by someone else, who understands what we mean even if - and this is so often the case - we aren't using full sentences. Transfer that way of speaking to writing and what do you get? A whole lot of mess that looks like this:

(1)
Mary  do you know the thing that (Tim)                           
Jim                              (Tim said?) yeah I do (2) and 

(2)
Mary                 =girlfriend of his      she's a wa she's 
Jim   what about that=                   mm                                 
(3)
Mary  a (chav)
Jim     (chav) (.) yeah

It's not very neat, is it? Although it's a conversation I just made up in my head, I modelled it on  a transcript of actual speech, something I'm working on for one of my modules in uni. The more I write it, the more it becomes obvious that this is not the sort of structured dialogue I'm used to. People talking at the same time, using fillers, taking pauses for no reason - and most of all, not talking with punctuation or capital letters?? What is this madness!

I usually try to write dialogue how I think that character would speak. You know, using the English language with a few swear words or vernacular phrases or whatever when the need arises. I used to think that was as good as having a real life conversation in my stories but it's not as simple as that. Real people interrupt. They talk over others. They even go so far as to raise their voice for no other reason than they're excited. Sure, this can be expressed in writing fairly well. Or can it?

Interruption isn't just about cutting someone off while they're mid-sentence because you're rude or have heard enough. In real conversation, it can be used constructively, like in my example above. Jim interrupts Mary in the first stave not to be rude but to assure her that he knows what she's talking about and reaffirm that he has an interest in the conversation by continuing her point for her. Unless the story is in the realist genre (and even then my instinct is telling me to have doubts), this sort of interruption is rarely seen in fiction.

When I think of two characters talking over each other in a story, it's usually something like this:

"He's lying," Mary said at the same time Jim insisted to Paul: "Listen to me."

or

"It's mine!" they both shouted.

Now, I don't know about you but I think the first example loses out because I've already got Mary's words in my head and by the time Jim's line appears it's too late. I can't really imagine them saying the lines at the same time because they weren't introduced that way. Another way of presenting this in a story would be to have the two phrases on separate lines with the following line: Mary and Jim spoke at the same time, confusing Paul. It's just not effective in giving me the simultaneous speech, although it describes that it's meant to be taken that way. In other words, it's a bit of a let down.

The second example is only good for the rare times two (or more) characters say the same thing at the same time. Other than that, it's just useless really. When a character talks over another, it's demonstrated much the same as interruption and falls flat (when considering that it's nothing like actual human speech. As a piece of literature it's probably pretty fantastic). And how do you even begin to show how a character uses a louder voice to implicitly tell the world they're excited about something? Using more words. Great. Note the sarcasm.

But whatever.

I'll be keeping all these observances in mind as I plough through my work, both academic and creative. Maybe I'll come up with a solution but most probably I'll come up with a headache.