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I tried one on skyrim. It derails very fast and conversations aren't that interesting anyways.
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This would take alot of work.
My thought is that you could have a hybrid system with set dialogue choices and a "dynamic dialogue" thing where you can type things to say to it. Depending on the character that the AI is playing, it could act differently.
Maybe even cause things to happen in-game. Though there would be so many second-order effects from that it could break the game.