I would assume that Bethesda has a way to keep dragon attacks from breaking quests by killing quest related NPCs. If you kill NPCs and break a quest as a result, that's you're fault, but if it happens because of factors completely outside the player's control, like say, dragons attacking a city when you're not around, that's going to make a lot of players very annoyed. Perhaps important quest NPCs will always take cover inside a safe building when dragons attack, and only come out when its safe, and only random NPCs will be out in the streets to serve as dragon fodder, or maybe NPCs related to important quests are still essential and handled like in Oblivion. I wouldn't be surprised if the whole "I want you to go to the Scary Dungeon of Evil Doom to retrieve the Ultimate Sword of Mighty Stabbing for me, here, let me mark the dungeon on you're map. Oh, yeah, and I'm angry that you killed my brother." thing only only applies to NPCs related to side quests. After all, I doubt that if you kill Esbern (Assume he can be killed at all.) he'll be replaced by his brother. "John who is Esbern's brother was one day an office and was writing in a journal..."
Yes, I don't really think that the system is meant to be an actual replacement for essential NPCs that does everything the system does, but just a means to allow players a bit more freedom with killing NPCs while not immediately breaking quests for using that freedom.
Honestly and seriously Sebeth, the first paragraph you've posted is exactly what I'm looking for.
Yes it'll make me green and orcy just as much as anyone.
However it'll show actual development to the RPG.
A full AI DM, with the sheer tendency to pull off a HAL.
I want cause and effect, I want to feel that if I go away and do something else in a full blown civil war with dragons.
I may come back to randomly and in a unique fashion find that I've been fracked for doing so.