I have dialogue recorded and I want to use it with my NPC's, but I didn't realise that the construction set would want you to use its own voice recorder. Is there any way to import my own .wav files into the CS and let oblivion lip sync it etc? Getting the NPC's to use the .wav's is fine, but I don't know how to get them to lip sync to it.

IIRC correctly, lip syncing is broken with the 1.2 CS. You have to dl the older version for it.
Slide over to TESAlliance and check out the modding schools. I'm fairly certain there is a tutorial to help you with this.

Animations can call sounds to play they can also trigger FaceGen -> but trying to Animate an entire conversation though a .kf is going to be very tedious to say the least.

I use SpecialIdles to animate Creatures talking with sound files and morph tags, works great except that sound tags do not falloff based on distance from source so you have to make sure the sounds get triggers only when the player is near so you do not get ghost voices.