DEPARTING MDT JET TOOK EVASIVE ACTION BY STOPPING THEIR ASSIGNED TURN AND LEVELING OFF EARLY TO AVOID ANOTHER OBSERVED ACFT IN THEIR FLT PATH.

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OUR FLT WAS CLRED FOR TKOF ON RWY 31R AT DSM WITH THE RESTR OF 2500 FT. TWR ADVISED US THAT TFC WAS XING THE DEP PATH AT 3000 FT. THE TKOF PROCEEDED; AND WE WERE HANDED OFF TO DEP CTL; WHO ISSUED A R TURN TOWARD OUR FIRST DEP FIX; OTM. I INITIATED THE TURN; HAND FLYING THE ACFT. MY FO; WHO HAS A WONDERFUL HABIT OF LOOKING OUT THE WINDOW WHEN WE TURN; SAID 'STOP YOUR TURN!' SIMULTANEOUSLY; DEP ISSUED TFC 3 O'CLOCK AT 2400 FT; NO DISTANCE SPECIFIED. I ROLLED LEVEL AND NOSED OVER; STOPPING OUR CLB AT 2300 FT AND PASSED AHEAD OF AND SLIGHTLY BELOW A SINGLE ENG CESSNA. A QUERY TO ATC BROUGHT ANOTHER VOICE WHO SAID THEY HAD NOT BEEN ABLE TO CLB THE CESSNA DUE TO FREQ CONGESTION. HAD I BEEN INFORMED THAT THE TFC WAS ACTUALLY AT OUR CLRED ALT; WE WOULD HAVE DELAYED THE TKOF. MY FO'S WARNING CAME BEFORE THE TCASII ALERT. BOTTOM LINE IS; WE STILL HAVE TO LOOK OUT THE WINDOW; AND AS OUR AIRPLANES GET MORE COMPLICATED; THAT IS GETTING HARDER TO DO. MY COMPANY REQUIRES THE PNF TO SET AIRSPD BUGS TO LIMIT SPDS (200; 250 KIAS) AND MAKE SELECTIONS TO THE FLT DIRECTOR PANEL IN RESPONSE TO PF DIRECTIONS. SO HE COULD JUST AS EASILY BEEN LOOKING AT THE PANEL INSTEAD OF SAVING OUR BUTTS.