The Layer Style dialog has always been rather large, agreed. Perhaps they could make the left side with the Styles a panel that we could close temporarily while we worked on the right side and looked at the image. You'd still have to drag the panel around a bit to be able to see everything, but it could make it a bit nicer to work with.
I have no idea how much is involved in doing something like that. I'm sure it wouldn't be a quick and easy fix, so for awhile yet, I'm afraid you'll have to just keep trying to drag it out of your way. But maybe with enough votes, they will try to do something for it.