Here is how you set up the optimal mousewheel bindings for this game. Alternatively, if you are fine with using the game's default binds, we have a pre-made file in the Resources section.

• Open the game's Launcher, choose Settings -> Controls
• Unassign "Previous Gadget" and "Next Gadget" (also make sure mouse wheel isn't being used anywhere else)
• Assign Mouse Scroll Up to "Run/Glide/Use"
• Assign Shift+Mouse Scroll Up to "Counter/Takedown"
• Assign Shift+Mouse Scroll Down to "Strike"

When you're done all that, close the launcher. Opening the launcher again will reset everything we're about to do, so never open the launcher again, if you do you will need to redo the next step and any other config file edits that you do.

Then, open the UserInput.ini file found here > "Documents\WB Games\Batman Arkham City GOTY\BmGame\Config\UserInput.ini"

and add this full exact line, including the period at the end:

.Bindings=(Name="MouseScrollDown",Command="QuickGadgetB | VenomShockwave | BlockBreaker | ExitAgilityMode | SkipCutscene | CancelGadget | DebugMenuSelectB | CancelBatarangCamera", Shift=false, bIgnoreShift=true)

With all that setup, you'll have:
-Mouse Wheel Down skips dialog
-Mouse Wheel Up opens grates, dive rolls, etc
-Shift+Mouse Wheel Up counters (for the Ra's boss fight)
-Shift+Mouse Wheel Down strikes (mainly for Hammer/Sickle fights)