In sentence 1, I would prefer using past continuous (he was holding the hand ...), because using past simple will make it sounds like he held some white girl's hand habitually. (Note: If you change because to after, I think held will be more appropriate. It should also be even more appropriate than past perfect, in my opinion.)
To explain why using past continuous (or past progressive) is preferred, here is the closest entry I can find in Practical English Usage by Michael Swan.
422 past (2): past progressive (I was working etc)
3 past progressive and simple past: 'background' events
We often use the past progressive together with a simple past tense. The past progressive refers to a longer 'background' action or situation; the simple past refers to a shorter action or event that happened in the middle of the longer action, or that interrupted it.
As I was walking down the road, I saw Bill.
The phone rang while I was having dinner.
Mozart died while he was composing the Requiem.
In sentence 2, if you have this sentence alone:
Fans (queued/were queuing) overnight at a Hollywood music shop for the chance to get Lady Gaga's autograph.
I would say that either queued or were queuing can be used, depending on the way you want to narrate the scene. If you were a journalist writing it as a news, I think using queued would be more appropriate. However, if you were an anchor reporting the news, using were queuing would be more appropriate. This is because, according to my observation, TV news anchors usually use progressive tenses to arouse our attention, to make us feel as if we were in the scene of the news they are reporting.
However, when you gave the full passage,
Fans (queued/were queuing) overnight at a Hollywood music shop for the chance to get Lady Gaga's autograph. While they were waiting, Gaga saw their tweets. She immediately ordered 80 takeaway pizzas and sent them to her fans in case they were hungry.
I changed my preference to queued immediately. The reason is because it will provide the background (or the first reference time [ref.], if you prefer) for the whole story. Besides, there is already one use of the past progressive (... they were waiting, ...) as the main event of the whole story, which is sufficient for a news report.
Although seemingly synonimous, these two uses can have different meanings.
In your examples, the first sentence expresses planning while the second one shows a general expectation/ promise.
First example:
Mary thought John was going to invite her to the party -> She thought he planned to invite her; she was on his guest list.
Mary thought John would invite her to the party -> She saw it as a logical, reasonable expectation that he did. expectation/ promise ( because they are good friends or because he said he would)
Second example:
- They thought the film was going to start at 8:00.-> They thought the film was scheduled to start at eight. - plan
- They thought the film would start at 8:00.-> They were told/they assumed that that was the time it started. - expectation/promise
Check some more examples and explanation of future in the past in this page
if you like. It's no grand authority as such, but there is some helpful information.
Best Answer
They're all grammatical.
You could say
The first, was taking, puts emphasis on the action as recurrent action, corroborating or reinforcing the meaning supplied by in those days and every day.
The second, took, relies
solelyprimarily upon those temporal phrases for that meaning. (The simple present and simple past can refer to customary behavior.)The third, would take, also corroborates and reinforces the idea of recurrent action, my then customary behavior.
The subtle difference between was taking and would take is that the continuous refers to the action as repeated or recurrent action, whereas would take refers to the single action as emblematic or representative of the customary behavior.