To begin with, a thought provoking quote:
“Subtle interactions such as conversations are still out of reach of autonomous AI; games rely on clever scripting or cutscenes to get that across. If we as a field will master these types of interactions, more parts of the game can be interactive, and possibly whole new game genres may become feasible.”
– Remco Straatman in The Future of AI in Games (2010)
So what would it take to allow free form conversation in a text based game? More after the break.