The "start modal Dialog" should get an additional input for a VI reference. With this input the start and End modal Dialog VIs could be stored in an FGV, what would clean up the blockdiagram.
I've also gotten burned by this recently when trying to move the 'start modal' function into a subroutine with other startup logic. If the function had an optional input where by if NULL it assumed parent VI, and if !NULL it used the VI reference passed this would be hugely helpful for larger / more complex dialog architectures. I know other VI blocks can do this, so it'd just be a matter of leveraging the feature for this one.
Just found out the hard way that this can't be put into a subVI of the VI you want to be modal. This really should have an optional VI reference as suggested.
This has been implemented in TestStand 2014! See the 2nd and 3rd items here: http://zone.ni.com/reference/en-XX/help/370052N-01/tshelp/infotopics/2014compknown/