I think it could work if you went the other way around. Like you have a huge database of facts about the world, and then the chat algorithm is capable of spitting them out or working them into conversations naturally. You could make an entire game out of this - think of the game Her Story, where you have to search through the interrogation clips to find the information you need, but instead the information you need to solve puzzles in the game world is in the chat algorithm, and you need to talk to the right NPCs and ask the right questions to find it.