The technology seems intriguing, though still... I'm wondering how this is going to be a full fledged game? I don't see the fascination in talking to and interacting with a little boy O_o? 

Perhaps they can create a game like Myst, where you can talk to the boy and tell him where to go and help him solve mysteries.. XD I don't know. 

Lol, I should stop talking crap and go to sleep (1:00 am here) . 

Yep.  It is the natural interaction with the game that is the most compelling aspect.  Good to hear Pete talk about it.  Do they publish TED presentations?

i always find pete so amusing.  definitely my favourite developer to hear stuff from.

Its like seaman but with a boring little boy instead of a creepy man fish

Milo of the Rings.

You play Sam Wise and help him through troubled times to make it to Mordor.

Some ideas I had:

1) What if the 'game' is something like the movie 'The Cell' where Milo is actually the child avatar for a person that knows a secret that you're have to find out by building a relationship with him and this is one of many 'personalities' you interact with before you get what you need to prevent some catastrophe?

2) What if Milo could be some Skynet like computer that wants to destroy all humanity and our efforts to reach out to him/it and show the our value as a species will decide the fate of all?

3) What if this tech could be applied to some type of detective story where you have a great mystery to solve by having to interact with people like Milo to solve it?

Sounds like my Team Milo = R&D Project hunch was more or less correct.

Molyneux's comments towards his co-worker sound incredibly condescending. Is that intentional or just more of Molyneux's sub-conscious arrogance?

If someone wrote off what I had been working a year plus  as a tech demo, I'd be more than a little annoyed with them too, even if they were a co-worker.

Milo and Kate will be ground breaking and exceeds as the best AI.

Understandable that he'd be miffed. I just think Molyneux could put Greenberg in his place without compromising his professionalism. Brag about how your cutting-edge research is making great strides and is being kept closely guarded without making the PR guy sound like a pathetic, clueless worm (even if that's exactly what he is).

Public bickering doesn't do anything good for the company image. And a little workplace respect can keep your employees focused on customers and competition rather than stabbing each other in the back.