Hello Guest, and sorry for my delay in replying (I've been away over the weekend).
I'm not sure if the Chatterbot-approach is really superior from a gameplay perspective. While they can show nature-like reactions to your comments, in my opinion they still don't have much to say, i.e., you can go through the motions of talking with them, and you get some impression of their "personality", but on the whole, I found the conversation I had with "Elbot" pretty futile and useless.
Admittedly, a Chatterbot's main strength is its ability to talk about really everything - but would most gamers actually want that? I've already received complaints about there being too much text in Teudogar. A significant number of gamers seems to prefer action over conversation. So maybe it's not a bad idea to keep topics and dialogue lengths limited.
Of course, within these (quantitative) limits, conversation must feel natural. And I think Teudogar does a comparatively good job there. People have a pretty clear recognition of their surroundings, of what happens in their community, of themselves, and of yourself, and of how others feel about you. People greet you differently once they've made your acquaintance; and their language becomes more familiar once you become friends. People comment on recent news. Merchants notice when your equipment is damaged and offer to repair this particular thing, or notice you're lacking a particular item, and offer exactly that item to you. Slaves are aware of what their masters think about you, and will treat you accordingly. People who can heal comment on your health. Your slave notices when you've been away for a longer period of time, and greets you accordingly. Robbers are aware of what kind of armor you're wearing, and will only demand what you have. People will comment on your weapon. Henchmen can tell you where their lord is (in the hall, outside, in his house etc). Ortwin can tell in what chest his gold is, and will comment when it's been stolen. When you're carrying too many things with you, Thoralf will offer you one of the empty boxes in his hall to store your things in. Osmund will warn you if you're about to set out for combat without sufficient armor, and will tell you what exactly he thinks you're lacking (weapon, shield, armor etc). People are aware of the time of day and can refer to it. Craftsmen are aware of whether or not their set of tools is within reach, and will tell you they can't do a repair right now if it isn't. Etc etc.
So I think Chatterbots wouldn't be much of an improvement in regard to giving you the feeling of talking to persons with real intelligence. And regarding content and atmosphere, in my opinion they would even be detrimental.
However, that doesn't speak against including _some_ of them here and there, especially within a Fantasy RPG. That might indeed be fun. Thanks for the suggestion!
And if anyone has any more thoughts or comments on dialogues, text quantity and quality, artificial intelligence, or suggestions for improvements you'd like to see added to Teudogar, please do keep posting...