I guess AI Dungeon is attempting something a bit like that. But what I am thinking is keeping the core as the MUD, which will ensure that game state and things stay consistent. Then having the AI generate things based on this core state fed as part of each prompt, to add a bit of variety to descriptions, or allow NPCs to have conversations. But always anchored by the world state tracked by the MUD. Except maybe for some random encounters inserted here and there.
That's the biggest issue with AI Dungeon is that it tends to not quite track whats going on properly from one sentence/paragraph to the next. Although they have improved it recently.