This mod will be most useful for people who like to use both the keyboard and mouse, it fixes issues where the mouse just flat out prevents some keyboard controls from working as expected. If you move the mouse pointer after entering a dialogue, then you will run into the issues below:

• A fairly common occurrence is when you leave the mouse pointer somewhere over the menu and you want to use the keyboard controls. If you like to switch to the keyboard navigation now and then, you will run into issues where the mouse pointer just flat out prevents you from scrolling to the top or bottom of the list with the keyboard controls.
• Another common occurrence is that as you enter the dialogue, you think the first item, next to the pointy bit, is the selected item. However when you press E, you find that the 2nd or 3rd item has been selected. This happens because the mouse pointer takes the focus away from the default option. Often times, I had to move the mouse pointer out of the way when entering the dialogues because of this.
  

The problem here is that we extended the dialogue menu ourselves with certain functions, for example: more dialogue topics (= dialogue options) being displayed for the player, or the arrow that's pointing down if there are overall more topics than the ones being displayed. But most importantly, a function to make whole dialogue sections not interruptable by the player (tab/esc don't do anything but pause the game). Enderal's story telling and quests rely on this function to force the player to stay in dialogue...

...If you would have quitted the dialogue you wouln't be able to continue in most cases or you wouldn't be able start the dialogue anew because noone would talk to your character suddenly. I didn't code the menu myself but from what it looks like it can't be implemented that easy. Someone who is good with Flash might be able to do it. I am not otherwise I would certainly have integrated it a long time ago (with permission of the author of course). You can use the mod at your own risk but then don't report any bugs that have anything to do with quest progress / stuck dialogue and such things.

Source Code
See BetterDialogueControls branch, which is in my fork of Mardoxx/skyrimui on Github. If you use my “patched” version for your dialogue mod a simple mention and link back to this mod would be appreciated, thanks!