So we've all seen how interacting with dialogue systems in games is really primative.  It mostly comes down too chosing lines of text that lead to other pre-determined lines of text.  Outside of a few experiments (Façade, Trust & Betrayal: The Legacy of Siboot) it's been pretty much the same since the early days of adventure gaming.  As amazing as Mass Effect's story was the system for communication was at is it's core over twenty years old.  So until we come up with real A.I. the real solution is to use intelligence.  Meaning Actors...

You want a true proper role playing game?  Well give people a role to play.  If you've ever been to a murder mystery dinner then you understand the concept.  It would be a truly emergent, dynamic system and now that I think of it Death By Sleep would be an example of this concept.  Also for the record this idea comes from both the end of 1 vs. 100 as well as the book The Diamond Age by Neal Stephenson.

If I played MMO's ever then perhaps I would have a little more insight into how this could work (or perhaps has worked) but I stay far away from those things.  It could go in which all the players have different roles or in which people are payed to be NPC's to the main player's experience.  As it stands I mostly wanted to throw that out there.  Ok thank you.  The end.