I believe in balance and moderation. Also, it's a question of style. Depends on what the story's about, too, rather heavily.
On that first question, I *prefer* to have the characters' thoughts and musing be in prose form. But sometimes, the interior dialog, whether marked like <<this>> or otherwise, is very effective.
My favorite author uses what I think is called "tight third person" -- the entire book is from one character's viewpoint. There, she uses italics to mark the interior dialog. Once you figure out what she's doing, it works very well.
Lois worked on picking the door lock. Come on, Lois, you can do this... Ah! The lock clicked open.
On question #2 -- Yes, there's such a thing as too much introspection, though clearly the definition of "too much" varies quite a lot! There have been a few occasions when, say, Clark spent four pages pondering something. I always expect him to open his eyes to find that Lois has gone to the kitchen for a sandwich
Or if Clark thinks about what Lois said, then Lois thinks about what Lois said, then Clark thinks about what Lois might be thinking, and Lois thinks about what Clark might be thinking, and...
But those are extremes, and obviously there's a chunk of readership who enjoys this (well, something like this
).
But then, on the other hand, I don't quite see the point in reading a story where characters *never* think about what they're doing, either. But again, that's my personal preferences showing
The book "The 38 Most Common Fiction Writing Mistakes (and how to avoid them)" by Jack Bickham includes a chapter called
"Don't forget to let your characters think." The author's explanation of this is that you've got action scenes, when lots of Things Happen. And then, you need quieter interludes where the character begins thinking rather that just reacting, which leads to Decision Making. The ratio between the two can vary widely, of course, but they're both necessary.
Scenes end in disasters, which require sequels. Sequels lead inevitably to new decisions based on new experience, and these new decisions involve a new goal. The moment the character acts on this new goal -- and encounters new conflict -- you are into the resulting next scene.
That's just one author/professor's take on things, of course. It ain't gospel. But I figure it's an interesting concept to ponder.
PJ