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That helpful farmer has a few more allowed expression types. He will generally respond well to persuasion appeals for information but coercion attempts will turn him off. He's not going to be compliant on Combat Assistance unless you can either appeal to his own sense of self-preservation (because the enemies are visible) or by threatening him to help you or die.
The gangster with the hostage has even more allowed expression types because he represents a very specific problem for the player to solve. His type is biased towards defiance for all interactions. However, there are a few key persuasion expressions that have big compliance modifiers, like self-preservation, and it may be that his personality type is very susceptible to bribery. The challenge for the player in this situation is to test different expressions on him and figure out what works before you've pushed him into defiance.
Imagine this scenario. A gang of thugs shows up to cause trouble. You duck behind a dumpster and exchange gunfire. While reloading, you bark out a coercion attempt at all of them using an Intimidation expression. You hear your character yell, "You guys messed with the wrong guy!" (A stock phrase, not anything custom-scripted for this scene.) Interaction meters appear above their heads and most of them shift strongly towards defiance; they yell back stuff like "Screw you!". But one thug doesn't: his meter slides towards compliance and he replies with something like, "Nuh-nuh-no we didn't! We'll get you, man!" He's a coward. The next time you shoot one of the thugs, you initiate an interaction directly with the coward and make a persuasion attempt with a self-preservation expression. "It's not too late to get out of here before you get killed!" The thug gets up and runs away and you've just helped even the odds.
Is This Practical?
Mechanically, yes. You build your lists of interaction types, expressions, and personalities and the system does its thing. That's one of the benefits of a universal mechanic over custom interactions.
This is, however, a big new feature. It's a long way from free. I think it would do very well situated into a personality-driven action game like Uncharted or Splinter Cell - in fact, Splinter Cell has had a fairly universal coercion mechanic to make prisoners talk, although there's not much to it. In these games almost all the conversation content can be universal rather than custom-contextual. In this approach, conversation is a tactical tool to help you defeat enemies, manage allies and neutrals, and occasionally gain information, rather than a vast custom-context conversation system.
In a Bioware-style game, this approach could cover the tactical scenarios as well as ordinary tasks like shopkeeper haggling. For quest conversations, you may still want to take the full-text approach to better deliver characterization and exposition.
Is it Fun?
Well, I think so. I would love to crack wise to random NPCs and see how they'd react. I'd feel more immersed in the world and I would have a way to interact with it besides shooting guns. I think the more mechanical, gamey approach would make conversations more interesting and accessible to the text-averse. And once a couple of games adopted this feature and other designers started treating it as part of the player toolkit, we'd start seeing some really innovative uses for it.
I for one would rather have a little more conversation with my action . . .