It's a good start. Creative writing really doesn't have any 'rules' as it is art. How can one apply rules to art? Instead, there are suggestions.
Personally, I find Format Style 1 hard to read. It is a bit hard on the eyes as the punctuation does allow the reading to flow like a novel or story. It may be fine for a play or script to be read by actors/directors. But as a reader, it is like sandpaper on my eyes.
Style 2 can be a bit long too. Reaching back to composition "guidelines", a paragraph should have one topic sentence, a few supporting sentences, and a conclusion sentence. If you group too many topics, the paragraph point tends to get jumbled.
Creative Writing sources in regards to fiction writing (general, fanfic, etc), seems to suggest 1-8 sentences a graph. Also, paragraphs should end when the voice changes, time changes, something new is introduced, a setting changes, the "camera" moves, or basically something new is happening. That allows the reader's mind to absorb your details and grasp your points better.
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Lastly, and please no one take this the wrong way. The Ampersands (i.e. &) vs. "and" in writing. Professionally, ampersands are used in titles, signage and website buttons where space is limited or the ampersand is part of an organization’s branding. Whereas, in written prose "and" is preferable. I do understand that in the era of 'texting', that abbreviating happens. Yet, I guarantee you that if you turned in a written composition or essay to any professor or person who had to review your writing with ampersands instead of the written "and", you would likely get some comments.
In summary, you can disregard everything I have said in the above. It is just my personal opinion as a fanfic writer. I read a lot and write a lot. But like anything, this is art. Thus there is really no 'wrong' way. However, just as in art, not everyone will fine it to their tastes.
We all write as we find enjoyment in it. Sorry for sounding like a strict English composition police.