After playing the game for a while it's easy to forget how good the AI is, because you start to see the flaws more and more. The Radiant AI really is impressive in that it helps make the world feel more alive, as if everyone has a life that goes on when you are not around, rather than just waiting for you to show up.
That said, I have one general comment about the AI, specifically the integration - or lack thereof - between the AI and the scripting.
When conversing with people as part of a quest, the lines they deliver and their temperment is pre-determined. This can often conflict with how they actually feel about your character based off the AI response, and it can make for really disjointed conversation. The first big instance I ran into was when I had to help one of the city mayors (not sure what he title was) find who stole her painting; it was one of two suspects and she asked me to gather clues. She asked me this the first time I spoke with her, and I thought it was putting a lot of trust in me.
She gave me keys to the entire castle, including her private quarters, and gave me free reign to roam through. It strikes me that you've got to have a lot of trust in someone to do that. And when I found the painting, and turned in the guilty party, she was over joyed. After receiving a reward I then asked to buy a house in town.
"I'm sorry, I don't trust you enough to talk about that."
....WTF? You just trusted me with keys to the castle, and I can't talk to you about buying a house? A very odd exchange to say the least.
Other examples include when I am looking for some one in their home for a quest. I often find them at night, when their door is unlocked but when the entry icon is red, meaning I'm not welcome and will be tresspassing. I can walk in, and the AI response is that I'm tresspassing, but I'm welcomed when I get there. That leads to conversations like this:
"What are you doing in here? Get out!"
*I start to talk to her*
"Oh, I'm so glad to see you! I really need your help. blahblabhbah quest stuff blah bhal bha"
*I stop talking to her*
"Get out of my house! I'll call the guards!"
*I run out before getting arrested*
One possible way to address it is to simply not allow NPC's to discuss quest topics when their disposition towards me is negative, but that has it's own set of issues. At any rate I wanted to comment on it, since it goes a long ways towards making conversation with NPCs less enjoyable than it could be.