But...'Now' is used here in a sentence in the past tense. We don't use it in conversation that way.

First, I can easily imagine myself in a conversation with my buddy, Ralph, where I might say to him, "..., so I was just sitting there in the lobby trying to keep my eyes open, I was so exhausted. All at once, I opened one eye and this fantastic long-legged blonde was just sitting down on the chair opposite mine. Now both my eyes popped open, and my brain began to buzz..."
So I don't believe you when you say we don't use it in conversation that way.
Second, what does fiction have to do with it? Why can't a non-fiction text use the 'displaced' now as easily as a fictional text? I can imagine reading an astronomy textbook explaining how the universe began, for instance, and using a 'displaced' now to explain why an initially expanding but decelerating universe "suddenly" started accelerating. This is evidently what actually happened about five billion years ago, and yet in certain contexts, I can imagine referring to it as now.
Larry Latham