@DaWaterRat - I really like all of your suggestions for the magical distinctions.
Maybe you're right about the framework, but the the things that gives me hope is that its already done with a little tweaking, so less work for the developers, just the spells would be unique.
In terms of their interactions, even Realm of magic didn't have a very extensive list of dialogue options. I don't think there was even an option to admit to being a Spellcaster, for instance.