A couple more tweaks:
☞ If the user cancels, 'choose from list' returns {«class fals»:false}, not the string "false" — need to coerce to text (I haven't been able to get consistent results working with the chevron class).
☞ Running my original version, the choose from list dialog didn't always have focus, so I couldn't use it without mousing. To rectify I put it inside the tell system events block with an activate command.
☞ I assume if the user cancels, they won't want to paste the full text; also no need to modify the clipboard.
☞ The try block doesn't seem necessary as far as I can tell.
So, here's my current version:
tell application "System Events"
set frontApp to (name of (processes where it is frontmost)) as text
set fullClipText to (the clipboard as text)
set clipPars to paragraphs of fullClipText
activate
set myChoice to ((choose from list clipPars) as text)
end tell
tell application frontApp
activate
if myChoice is not "false" then
set the clipboard to myChoice
tell application "System Events" to keystroke "v" using {command down}
delay 1
set the clipboard to fullClipText
end if
end tell