The real salient point, in my opinion, is whether we can get generative AI to create game content which is not this, but rather novel, engaging and interesting with a solid gameplay loop.

I'm genuinely curious and think it's a cool area to research.

Of course, a story has to be a story that somebody actually wanted to tell. If you just SHOVE mountains of extra characters and extra side quests into a game where they don't belong and have nothing to do with the main story line, of course it's gonna suck.