One thing I have been playing around with recently is a modified version of MSBT that, in addition to showing self damage, also shows damage taken by my friendly target.
Action shot:
http://i41.tinypic.com/263g0gk.jpg
You can see in the screenshot 2 columns of "floating" text. The right column, closest to grid, shows incoming damage and other events to the target. The left column shows outgoing direct heals (hots are a bit spammy) and incoming and outgoing damage. Other configuration (cooldown notification, event notification) is the default MSBT setup. I've set the scrolling speed quite slow and turned off the glitzy text effects for readability purposes.
You can actually use this information to reconstruct a timeline of immediate events--in the case of this screenshot, you can see that following the initial regrowth (on the left, 3297 hp healed) the tank took a large spike of ability damage and 2 unblocked attacks for 10k damage. Jurik responded with another regrowth, which crit and ended up being mostly overhealing because HoTs ticked back most of the damage before it landed. You can also see that the monster has some a reflective damage shield which hasn't been dispelled that is doing very minor damage.
I've only had this running for a few days now, so I'm definitely still toying with exactly how best to set it up, and whether it is useful enough to outweigh the "information overload". After healing through a few heroics I'd have to say it is working well, but I haven't put it through any raids yet.
The way I'm currently accomplishing this is by editing the MSBT lua to capture friendly target events in the pet filters. This would probably irritate hunters and warlocks who actually use that filter, and it's certainly distracting when doing any quests that give you a minion. If people are interested, I can post the 2 modified lua files for this. The implementation is currently a bit of a hack, so anyone who tries it out should be aware.