Glad you have resolution. While you have only 2 speakers in play, using it in stereo mode seems fitting.
Some of your description makes me wonder if the system was sending the missing dialog perhaps down a center speaker cable to nowhere (in a 2.1 setup)? Is that cable perhaps in place but not hooked to a speaker? Because in a 3.1 or higher setup, dialog generally is split out to the center speaker. If you have the cable in place but no speaker (or you have up to both of those but it is not wired properly), that might explain why you were not hearing dialog: AVR "thinks" you have 3.1 with a center for dialog and is sending it to nowhere?
Music/effects works/worked because it is generally stereo (and kabooms are generally sent to the .1 sub). So even if you have 7.1 or 9.1 or 11.2 speakers setup, music/effects/kaboom would work fine. With rare exception, music can work with as little as only 1 speaker, but is generally "full" with 2 speakers or any amount greater than 2.
It's a little difficult to fully interpret your description but my gut guess is that your AVR DOES think there is a center channel speaker and that's where the missing dialog in movies/shows was going. If wired, it may sense it even without a speaker (in other words, the AVR "believes" there is a center for that dialog)? If banana plugs are in the center speaker terminals but no wire, perhaps just having something inserted is "fooling" it (to believe there is a center speaker for dialog). Maybe you have an AVR menu setting(s) that basically tells it there IS a center speaker even if there is not one? etc.
My next guess is that it may be mis-wired. What you may be describing as "bogus" in those last lines may- in fact- be because of improper wiring. In general, banana plugs work great IF the wiring is right. I suggest thoroughly rechecking all wiring at both ends (be sure red connects to red and black to black (that so easy to mix up), be sure the banana plug raw wire is properly setup/connecting- for instance, test your center speaker wire with a speaker you KNOW is working, etc).
My next guess is wilder: do you perhaps have a RCA cable plugged into a center channel jack that may override the amplifier connections? Some receivers will let you bypass the internal amplifiers to send sound out to a dedicated unit. If you might have a cable plugged into a center channel RCA jack, the AVR may assume center channel "dialog" should be sent out through that cable to a separate amplifier to which such a cable would sometimes be attached. You might want to check that too. Sometimes people will just tuck in a loose cable to an empty jack when moving an AVR and not really think about the jack they are using as only a cable holder. Unplug such a cable and the system no longer thinks there is a center channel speaker/amplifier.
Lastly, have you ever had THAT AVR hooked up to 3.1 or more speaker setup, so you know for sure that the center channel works? Again, if the system is "fooled" into thinking there IS a center channel speaker, it would likely send movie/show dialog to that speaker (even if it does not exist). That seems fairly plausible to explain the experience you were having.
If you have one more speaker laying around, perhaps hook it to center, reset the change you made and see if you can get dialog out of a 3.1 (temporary) setup. If so, you'll know you simply need to get the rest of the speakers to have full surround sound with your AVR... or at least ONE more speaker for a minimal 3.1 setup.
If that test helps you discover that, the other option would be to change a setting in the AVR to play everything as stereo while your system is limited to only 2.1 speakers. That will ignore the actual/faux center channel/cable/plugs/error and center channel audio will be split between left & right (so you'll hear it with only 2.1). Often this is something you set in a variety of menu options so that the various inputs are playing audio in stereo vs. surround.
Again, hard to interpret your description in full but if you are confident the AVR is fully functional, I suspect that problem is solved when you add a true center channel speaker and re-check your cabling whether hard wired or using banana plugs.
Your workaround is "as good" for now but since you already have the AVR, you are on your way to a richer surround sound audio system that will play much better than basically leaning only on stereo for the long run. It's worth building out the system, especially since you already have your central hub in place.
I hope this is helpful.
