There are certainly many ways to do almost anything in Construct.
If I had more than a small amount of dialogue in the game, I'd probably go for something a bit more dynamic than that. I've never used the timeline object, so I'd probably go for my usual solution of creating variables of some sort to control it.
Since the complexity of dialogue systems in various games can differ greatly, it's hard to say how well what I'd do would fit your game, but I'd most likely load all of the dialogue into an array from a separate file. Then I'd create another array that contained the indexes of the start and end of the dialogue for each segment of the story progression. If there are more 'speakers' than one, then that would also have to contain an index for said 'speaker' with each segment.
With that in place, one can build an 'engine' to activate, display, handle input, and deactivate dialogue, so that a function call or enable group (or whatever) could be used for dynamically handling any point in the story progression.
I made a quick mock-up of the idea here:http://dl.dropbox.com/u/5868916/dialogue.cap
basic, and could very well be optimized quite a bit, but it gets the point across, I think. It doesn't handle story progression, but just displays whatever array entries you tell it to, when the global variables 'DialogBeginIndex' and 'DialogEndIndex' are set to something other than zero.
It handles instant display of the text when the spacebar is pressed during writing in much the same way as you did, but doesn't have to have duplicate text in the event sheet, because it's stored in a variable already.
Anyway, I'm more of a hobby programmer than a game designer. The first idea is usually not the best, in my experience, so don't be discouraged at the idea of re-writing portions of code if you come up with a better way. Maybe a mix of timeline and other variables to control things may work, too.