I've revisited Groups in the Dialogue Module. The latest code now handles Groups in a way which is more consistent with other Moodle modules.
Students still cannot see Groups (in separate group mode they should only see other students in their group, I'll have to check that...).
Teachers now see a drop down list of "All Participants" and the groups defined in the course. They can now start the same dialogue with all the students in the selected "Group" (which could be All Participants). The selected group is "sticky". If the teacher selects a group in a forum then that group stays selected when they go into a dialogue. By default, the selected group is the teacher's allocated group. It's quite
and neatly sidesteps the question I posed in the post above.
It's in CVS and coming soon to the Modules page.