I think AI could bring a lot to the table, specially for RPGs.
Instead of having one or two "choice matters" options we could have some extra with different flavors, like in the olden days.
Certain information could be dynamically scattered in different conversations/npcs, avoiding synthetic loredumps. Managed by some variables of what the player/npc knows?
In the same vein, you could avoid having extra writing workload for 2349 races and genders and whatnot and have conversation dynamicaly adapt, maybe even take events of the world and the passage of time into account.
Instant rewrites and iterations, easy narrative changes late in development?
Possibly easier localization if the ai is writing stuff in the correct language as opposed to translation?
I see the whole thing more as a tool to complement writers than as a direct replacement. I'm just guessing but I assume that writers want to write interesting an important stuff, and the menial and repetitive parts could be relegated and maybe made less menial and repetitive in the process.
I don't really see the point in using AI to automate the trivial boring stuff. I think it makes more sense to just not include that sort of stuff. Maybe if you've got writers block or need some ideas, but I don't think we should rely on AI more than absolutely necessary. At this point it just becomes padding for the sake of padding.
I know PST has 1.2 million words in its tlk file, but how much of that is not padding? I know people love the amount of dialogue options you can get even in unimportant conversations, but after a certain point the novelty wears off and it becomes padding. By comparison Bloodlines has only a fraction the amount of dialogue but, combined with hammy voice acting and stylized facial animation, it's no less memorable and still manages to include immersive sim elements.
Unless the conversation involves racism, sexism, or romance options, a character's race and gender shouldn't matter. Certainly not enough to require a ridiculous amount of extra work.
World events? Passage of time? Is this an open world game where you can backtrack to every location you previously visited? Your actions have visible consequences for the entire world such that even backwater villages should change to reflect the world state?
I'm sorry, I just don't see the point of all this padding. You don't need to be able to hold long conversations with every peasant you meet on the street. There's immersion, and then there's just wasting time.