That's the system they use in the Final Fantasy games (the real ones, not the crappy RPGs on Warcraft III that look nothing like them).
Something like that is in an RPG called Hero RPG. It doesn't use those dialogs, but it uses a multiboard where you can select things. Don't ask me how he managed to enter selections in a multiboard, but he did it. The map is protected and the maker has been unreachable to me, but maybe you're more lucky.
PS: I actually got an idea on how he made that multiboard, but that would require a LOT of work. That would mean pressing the right arrow key to pop up a completely new multiboard with new options (if you selected something like Spell like in your YouTube video. There you got to check which spells he learned (which are all booleans or integer variables for each ability in the entire game possible), but for stuff like Items, you need to make a new multiboard where you only show the item if you got one, place the amount of items you got of it and do that for every item possible to obtain in the game.
If you also want something that doesn't annoy people to browse through the entire multiboard of items to see what they got (so there are no blank area's where an item is supposed to be if you don't have it), you'll also have to check if an item is there. If not, you'll have to check if the next item is there, if true, then you have to place the item that's 1 spot further into that spot.
As you see, that's a hell lot of work, but then you got quality! (And I'm planning to put that into my Final Fantasy map, which will not be 1 of those crappy that looks nothing like the real ^^)
Anyway, that system is not used a lot so it could work. But you'll have to make sure no-one interferes during a battle. If player 1 is having a battle with player 2, then player 3 can't just jump in and attack any of the 2. You'll have to make sure the 2 fighting heroes are in a private area or can only attack and be attacked by eachother.
