This takes you away from a dialogue system per say but I've been playing with the idea of an icon based language. Many RTS use icons for most everything anyways so much of the character interaction with NPCs could use emotes to express feelings and icons to indicate things, actions, places, people, etc.
I thought a basic short term, long term (based on repetition of short term) and recall memory (recalled by other characters) could allow AI to apply emotes to events and actions of other characters or the player character. The way to weed out minor events is influence. A character's influence is based on their connection to other characters earned through socialization (with individuals), success in combat and interaction with scripted events. Connecting to characters with higher influence works like a shortcut to earn fast influence with those already connected to the higher influence character. Scripted events can help connect the player character to many NPCs all at once as they watch or hear about the event. The key to make this viable is creating a system for characters to forget. The recall memory would allow a character to be reminded of some events returning it to short term but with all the old data of the amount of times it was communicated about. Keeping short term memory reduced to a certain size with influence of events and long term is a limited collection of repeated short term events could keep every character's memory to a manageable size. Hope this makes sense.
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