Pre- Submission Grammar Question?

Hello. I've written a novel manuscript, and I just had a question about its grammar. Since it is a manuscript, I know it will look far different if it were to ever be published by a publishing house. I know the basic rules of grammar. I know how to be grammatically correct. My question is about paragraph indentation. This link >http://www.dummies.com/how-to/content/presubmissio... quotes "Indent for a new paragraph each time you switch speakers when writing dialogue. Each speaker gets her own indent, no matter how short or long her speech. And if you have to use a speech tag or body language, join it up with the speaker’s dialogue."

I understand that you're supposed to indent a new paragraph for each new speaker, but what if there are only two people conversing. Example:

"Hello." He said.

"Hello." She replied.

Even if the conversation continues on like that for several replies should you indent each one? Even if it's only a few words of reply? Yes, I realize the above paragraph quoted directly says "No matter how short or long her speech." But does that rule still apply if it's only two speakers?

I went back into my manuscript and I applied this rule. My lines are double spaced. It looked incredibly unnatural. It doesn't flow, it doesn't even read smoothly. Plus, applying this rule for every conversation would add several pages to the manuscript, and fill it with lots of empty space.

Does this rule still apply? Thank you.