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Procedural dialog shouldn't be too hard.
Depending on how real you want the simulation to be.
Procedural text messages for an in-game phone.
Speech bubbles above NPCs heads.
Fully dynamic voice acting.
Fully dynamic body and face animation systems, that work across an arbitrarily large number of NPC body/face types.
The tech to make the conversations believable, beyond just the text, would need to be massively complex.

The game's AI will not be unbiased.
Do game designers/developers really want that?
I'd imagine it would be incredibly difficult to design (and debug) these kinds of systems.
Implementation into the game's design would also be pretty challenging.

We won't live long enough to see AI in games deliver quality conversations in offline games.
Multiplayer games (or online single player titles) could see some expensive AI running on some servers (the cloud).
Obviously, there will be limitations on the simulation quality.
Developers and publishers will probably try to use tech like this to drive micro transactions and user engagement.