Lots of great food for thought here. I think a lot of the DM "fine tuning" can be handled with appropriate context setting. And if this was bundled into an app, it could be given hints that help it to read the room. My mind is exploding with possibilities.

Oh and yes, pretty sure that you could connect a few of them together and have them play a game, absolutely. In fact, you could use that to add virtual players to a small human group... wow