How could you possibly manage a party in real time?
You couldn't completely, that's why the AI has to be at least somewhat competent. What you could do in DS2 is assign spells to characters and some of them would be autocast to buff or heal the party, summon monsters, or curse your enemies. All characters also had a unique skill you could fire off if it was ready to affect the battlefield in a way, either by providing additional firepower or introducing mechanics like gravity wells.
It wasn't the best system ever and could become chaotic at times, but it did work.
For some reason this reminds me of the old arcade game Gauntlet. It features up to 4 players, each player had a 'power' they could use which mostly just cleared the screen without damaging the other players. Coordination was almost non-existent. If you take away coordination and strategy there isn't much reason to have a party. That said, I think it would be cool to have a deep custom scripting system to try this. Diablo II had hirelings of different types which made for some interesting build synergies, but here again, friendly fire was disabled. I'm not totally opposed to the idea, but it's impossible for the player to have agency over more than one actor in real time.
Systems like these also make friendly fire AOE spells almost impossible to include, I've never seen AI that knew how to herd your opponent into an area so you can bomb AOEs.