You know, the demo I saw wasn't allthatimpressive. Granted, it was a limited alpha demo, but the conversation/interaction bit wasn't all that deep. The player had a set amount of interaction choices, and by clicking a button the NPC would play out whatever block script they had preset. If the player was rude to a guard by /emote rude, the guard got angry and remembered that player was rude to him. Sort of like individual faction built under the "guard" subfaction built under the "village of whatever" faction. Kinda neat.
What I'm more interested in is the way NPCs are supposed to seek out what they "like". The example given by Georgeson was "Orcs like gold, so they'll be attacking travelers on roads. Orcs don't like guards, so if guards show up the Orcs will move on". I'd like to see that process demo'd. Mob migration through the world is going to be a huge part the game, given that each server will have different distributions of players doing different things, NPCs on one server might be found in a completely different region than another server. They might even be higher tier, only found deep in the Earth because of player actions.
Being able to wipe out an NPC from a region could have a big effect on mob populations. You and your guild kill every last Crushbone Orc in the citadel, they stop spawning there. The place becomes empty until something else moves in. Maybe more orcs. Maybe goblins. Maybe a necromancer moves in and reanimates the the dead Crushbone Orcs to serve him/her.
Storybricks will only be as impressive as it is deep. If Georgeson and Co. can put in a ton of time to make different NPCs actually behave differently, while also having all the mundane interactions we're familiar with, it'll be pure win. Otherwise, it'll probably be just a bit neater than regular ol' scripting.