We were talking about AI, and how "true" intelligence can create a "script" for a situation it's not "coded" to encounter.
However, I think you could reasonably emulate that, for the purpose of a game. Yes, if there was "true" AI, all the NPCs would eventually look at the player and be like "hey man, you've been playing for 20 hours, go outside or something" and some mage would see a bird flying and create some Feather/telekinesis spell that held a ship up in the air, creating an "airplane." But we dn't need that level of consciousness.
We just need NPCs who can react to elements of the game without scripting (maybe a warrior won't blindly attack a minotaur if he "knows" he's only fought trolls before, unless of course his individual personality is the "martyr/paladin/berserker" type who's not afraid of death. They also need to "recognize" themselves and the player. I want to ask an NPC who they saw rob a merchant, and have him say "a dark elf in the red shirt" even though the theft, the elf, and the witness were never scripted. Basically, each NPC needs a "memory" the scripting of which is probably not so hard to do but the processing power required would great, even if people "forgot" stuff after a while. And of course people with low intelligence would remember less and for shorter. But like I said, technically impossible at this point, although they have recently developed a new type of microchip that has "3D" structure, increasing the amount of power in a given space...