Excellent point and this is certainly a feature that we are tweaking the dials on. We've currently landed on a solution where a reply comes in as the latest item (in chronological order) with a reference back to the original message. That saves you from the tedious work of describing who you are replying to in a fast moving chatroom. That view persists throughout your active session. Later, when you return for reference, the chat lines organize themselves in the threaded view you see in the screenshot. It's starting to feel right but like all the features, we need to live with them a while to know for sure.
I've always loved SBNation's solution for this. When you're logged in, comments auto-refresh (still in the original threaded tree form), and there are keyboard navigation shortcuts for navigating comments and marking them as read (so that when new comments come in, you can then navigate only the new ones). There are also "up" links to the parent comment. Another huge benefit compared to something like HN is that it saves the state of which comments have been shown to you to your user account, so if you close the window and come back to the discussion later it knows exactly which comments came in since you were last on the page, so you can quickly review only the new content.
It creates (especially for real-time stuff like discussing an ongoing sports game) a fantastic blend of the live nature of a chat with the ability to have deeper individual discussions (through the threading preservation and display) at the same time.
