Another issue would be emphasizing the meaninglessness of the dialogue. For example, playing Trails in the Sky has lots of NPC dialogue that's repetitive, but at least the dialogue is relevant with how the NPC's life progresses in the grander scheme of things, such as having difficulty with her entrance exams, or having an argument with his fiancé. It's not main dialogue but adds flavor for anyone who cares about the world enough to interact with the citizens.
I don't think I'd like to interact with characters that I know whatever it is they have to say is generated on the fly and adds nothing other than random tidbits. The novelty would quickly wear off.
GLaDOS from Portal would offer one player pudding and another one a steak. You get to a wall which says “the ravioli is a fraud” and become utterly confused.