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The problem is not the changes it is making to the DLGs, it's the fact that it lazily dumps a module DLG in the Override folder. This is not just bad from a mod compatibility standpoint, it's bad from a general game compatibility standpoint. There are three separate modules that have a lev40_carth.dlg file. Dumping one in the Override will replace all of them. Finding out which module it is supposed to be editing and merging the changes into the version in that module's MOD file is the appropriate solution. As far as k_hcar_dialogue.dlg goes, that is Carth's global DLG so that can stay in the Override.

If you want to see something get fixed, you'll need to create a new issue for it on the mod's Github repo. As to actually determining what is going on under the hood, you'd want to edit the scripts to pipe more verbose debug info to the feedback screen.