Thanks, I think you're right. It seems weird to have a parallel structure where the roles are swapped - but Toni Morrison would know better than me! Maybe it works better in the original context.
To see the context, I think I'd have to visit the "Random House archives at Columbia University’s Rare Book & Manuscript Library", though they do have a website: https://library.columbia.edu/libraries/rbml.html
Parentheses give a sensible parse for me (or nested further):
describe people and events from a distance instead of (dramatizing them, developing scenes in which the reader discovers what kind of people they are) instead of being told.
Imagine instead the word “and” in place of the comma before “developing”.
The letter writers wants the author to be “dramatising (their events) AND developing scenes in which the reader…”