It seems like something that could be trained starting with an existing GPT model and specialized to this task to me, but I'm just brain farting here. And by all means steal this idea if you're so inclined.
When you pair a better, prosier text input-response system with a procedural world model, if the procedural world model is built like existing ones you'll still have to deal with restrictions in the world's content and the valid interactions between constituents. At which point all that fancy AI makes for a more natural parser but doesn't add any richness to the game world, which is the thing we'd like to get at.
If anyone has ideas for how to solve the prose -> world model problem, that could be super fun and rewarding to work on, probably so much so that they wouldn't be sharing them here :(
What makes a world like Westeros different than the Shire isn't just facts like "seasons are really long" but elements of tension, political unrest, and the outlook of the people who inhabit it. To do this effectively, you need to be building simulations of literary works. There's always going to be an art to this, but instead of the manuscript, it's going to be about the parts of the model.
https://en.wikipedia.org/wiki/SHRDLU
Unless you feel you need flowery expressive input as well as output. But do we really need input more sophisticated than that of Zork here?
Especially if the traditional world sim is fairly rich itself (not like, as rich as the most rich that had been made before, but still decent), and the way the GPT part connects to it is good enough.