I'm testing adding the No To AI icon in the Steam page for Robot Anomaly.
Saw a couple of streamers wondering if some of the images in the game were AI generated (they are not!)
Also saw chat wondering if voices in a different game were AI (they were not).
Sadly Steam don't add a No AI disclaimer when the developer is NOT using AI. Only when they are.
I mean not elder scrolls specifically, but LLM NPCs are in fact being experimented with. There's a game called Suck Up, in which you play as a vampire with the goal of convincing LLM NPCs to let you into their home. I've seen some videos of DMs that as random experiments generated a town.
actually also sounds like modders have done, exactly that for skyrim
https://www.nexusmods.com/skyrimspecialedition/mods/98631