1.) How does it work at the extremes of volume settings, both soft and loud?
The unit has a "night" mode that works pretty well. As for loudness, at 50% volume, it is really loud for my room and it still sounds pretty good. I listen about 30% volume.
2.) How natural is dialogue over this speaker and what happens with dialogue pans as an actor is speaking while moving across the screen?
The dialogue is pretty clean and will pan across the virtual front speakers. It isn't as natural as my Von Schweikert center, but it is pretty darn good.
3.) What happens with the highs? Yamaha has a bit of a reputation for "sizzling" highs; how neutral is the tonal balance and what controls are offered to modify response?
I haven't noticed the "sizzling" highs yet. The unit allows you to adjust the tonal balance for 8 different "beams".
4.) What is music listening like (see 3# above)
Haven't done much with this, but from what I heard, my main stereo system (with Meadowlark speakers) sounds a lot better.
5.) Finally, what control do you have over the "surround" effect? For example, if you're listening to music and you want to "collapse" the soundfield down to a more "stereo" effect, can this be easily done by a button push (as opposed to going back into a setup menu)?
It is as easy as a button push. There is a "surround" button which cycles through the different DD and DTS modes. There are "beam" buttons which allow you to select the 2, 3, 4 or 5 sound "beam" modes.
BTW, the Yamaha website doesn't list B&H Photo as an authorized dealer, so you might not get the warranty if you buy from them. I got my unit from OneCall which is listed on the Yamaha site.