Some shooters do that, some don't. Closest to what you describe I can think of off the top of my head is the Flood Infection Forms from Halo, but I hate fighting them.
The shields thing is probably something that would have been more obvious in the original concept. Your own shield mechanic would have been introduced and would have had plot significance, and the characters would have had a discussion at some point about the best way to fight the mysterious monsters.
I think you've hit the nail on the head with the height of the dialogue box! I've called my games visual novels, but in all honesty the dialogue system draws more from western RPGs than anything. Looking at both Fallout New Vegas and The Outer Worlds, both of them use at most as much vertical space as I do, and- this is something that's never occurred to me before- it's dynamic. The height of the dialogue box is generally a lot smaller than mine because it's sized to its contents.
I don't know when I'll get a chance to prototype it but that is absolutely what I'm going to try next. I'll probably have to rethink how I do character portraits at the same time. Then again they've looked a little weird since I switched to a semitransparent dialogue box anyway.