I honestly haven't done much with the dialog-popup window, but to my knowledge the way it's set up in the UI is we just define how the bubbles look, it's the game client that chooses how to stack them so we don't really have anything that we can do around that: they'll always be a vertical stack of chat options.
Now, what might be possible would be to decrease the size of the individual response bubbles. They are something we do have access to in the eq2ui_proxyactor.xml Converation page. Along the same lines, you might be able to decrease the spacing in the Replies composite to pack them tighter together... it looks like a 10px spacing between them by default, so over 10 entires thats 100px of wasted space.
The harvesting NPCs chat bubbles annoy me too, it's just a lack of potential options. Since you brought it up and I took a look at it in the UI files I might take a look at it for Fetish and see how it'd look with the spacing trimmed down and maybe even the text shrunk a little bit. If it looks good, it should be pretty easy to make the same changes in the default or any other custom UI.
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