For the aforementioned "Smart Threaded" option the replies under that depth test post would look like this with thick dashed lines between direct replies to the OP and thin lines and indenting for replies to replies:

The point of the "smart threaded" option is to reduce the amount of indentation. It accomplishes that by making any reply, at any depth, that has < 2 direct replies a thread_level_2 post (as if it were a direct reply to the OP). Once there are 2 or more replies to that comment its thread level changes and it starts indenting.

However, that purposely completely breaks the relationship of replies to replies that have fewer than two direct replies. Nothing I can do about that. That's how it intentionally works.

If you enable the new "Compact Conversation View" option, which only shows comments by the current user and the OP, whether "smart threading" is also enabled or not, this is the layout used.