Can't really see much use aside from that or canning whatever the AI generated ahead of time. There's far too much potential for it to be jailbroken or loose track of what it's supposed to be doing.
The opponents have to use it too, which can open new game mechanics around silence or distracting noise.
Jealous NPCs. Space-sim banter. Follow-up plot points based on adhoc conversations.
What if we can't click the right dialogue all the time; we have to convince them from our experience.