Uncompressed the text file is really easy to edit as long as you're not adding new bytes. All you have to do to is move the line spaces around and replace regular spaces with a line space. Also if you want to find specific dialogue you can use the program HxD and use unicode text encoding when searching for a text-string.
Here's an example:
View attachment 190305
I edited the same text as klark231 for simplicity's sake. The red highlighted bytes are the ones I changed. "0A" is the byte for a line space while "20" is a regular space.
I replaced the regular space before "to you" to a line space ("0A"), and replaced the existing line space before "well" with a regular space ("20"). Then since I already know a lot of text will be moved on the second line and probably become unreadable, I added a new line space by replacing the existing regular space before "explain them too". This should make all the text in these sentences readable now.
I'm not 100% sure, but I don't think you'll have to add any bytes to fix anything else. If you do have to add bytes then you would have to fix all of the pointer tables associated with the file, and that would be so time consuming that it wouldn't be worth the trouble.
I have no way to test the edit I made because I don't have a tool to recompress the file into lzs format, so I attached it for you.