Oddcast just developed site avatars with articifial intelligence. It’s very exciting, I highly recommend you spend some time with it.

This form of AI (asking questions to feign intelligence) was pioneered by Joseph Weizenbaum when he developed ELIZA, a piece of software that would act similar to a therapist by rephrasing a patient’s answers in the form of questions to continue a dialogue and fake comprehension. It was a very compelling form of AI, and people became emotionally involved in the conversations they would have with ELIZA. ELIZA was the beginning of natural language as a text input interface (instead of artificial commands at the command line).

The Oddcast AI is definitely from this school of thought. Deep-rooted AI theory meets Flash avatar. I love it.