I've been working on AI roleplaying too on and off, but after...

"Authur moves west towards you menacingly"

...RP is imemediately broken in the reasoning chain, and it's in that mode the prose is generated, e.g.

"Alright. Arthur moved west towards me menacingly. As Merlin, I should do X. No, I should do Y. Hmm. Maybe I should do Z. Let me reconsider. OK, I'll do X. How would Merlin respond? Maybe 'I'm a cool wizard'. No. 'I'm Merlin the wizard!' Yes, that's the load-bearing literary masteripiece. Let me respond with that!"

"I'm Merlin the wizard!"