GT your observations are astute; i agree especially with your view on how the musical numbers were handled. And while they're good points, upon my three different viewings (in various times of my life) i never once thought of any of them. This happened not because I'm incapable, but because i was enthralled in all the other great stuff it had to offer. the originality overshadowed how it could be improved upon. besides, every great pioneer is improved upon. i think I'd be more inclined to look at these elements you suggest if I had more options from this obscure sub-genre to pick from. like, are there any other verite style musicals out there?
maybe if this had become a popular way to make musicals, then someday I'd point out how the original (dancer in the dark) lacked the vision of the subsequent incarnations. Kinda feels like you're barking up the wrong tree, and I'm amazed you even thought of this stuff quite frankly. for myself, it was the tone changes that impressed me. the attempt to mix dogma 95 and musicals is quite amazing. however it's not that it's just dogma 95, more so it's the film's intensity and realism despite the musical interludes. that is unheard of, and in my opinion delivered well.
Also, most importantly, i hate musicals. I despise 99.999% of them. mainly because the music is horrible and cliched in virtually every musical i've ever seen. i know i know people say that's the endearing nature of them, but fuck it, i don't care. I also hate musicals because it's like a freeze frame on the plot. I'm always waiting for the horrible fucking song to be over so the story can continue. dancer didn't quite progress the plot with the musical interludes (well one or two kinda does, but generally this is another thing that could be improved upon in the future), but the musical breaks did have story based precedence; she is going blind, loves music and day dreams. it created a reason for itself, and in turn i appreciated it. And also, the music is sung through a beautifully unique voice in bjork. the music hints at the classic genre, yet deviates on it's own to create something unlike it.
How music affects what the audience thinks of a character (especially when they're singing) is something that is never analyzed, and it should be. most musicals fall short in their ability to create true peril; something i think heavily has to do with the often idiotic let's-stop-and-sing element. think about any other musical, is the villain really all that bad? nope, because he starts singing and everyone including the soccer moms in the crowd learn to love his semi-badness. the whole musical experience is taken with a grain of salt. Sweeney Todd is the only other example of a deviation from this trap, and despite the achievements it makes, it still never looses that playful tone.
Dancer in the Dark fucking destroys this overly entrenched style. The cherry on the icing is the fact that von trier doesn't stop there, he doesn't make the villians totally ruthless, he makes them fully realized and three dimensional. They echo the badness of Dogville but are shown to have more of their own dilemmas. These type of characters are another genre breaking triumph. once again usually the bad guy in a musical is so transparently rich with ill intentions. And Bjork keeps true to her word and defends him in court. very rich characterization in a melodrama in my opinion.
for all the things going for it, I'm surprised you had time to stop and think something like: this editing and choreography is poor.