I've been thinking along these same lines. It's going to be very tricky to simultaneously get the rich language required for interesting reading and make it sufficiently interactive. It will be pushing the state of the art in natural language processing, because portions of the story will need to be procedurally generated as you go. Or possibly have a team of writers modifying the story in real time as you go, which is also intriguing. To make it interesting and interactive, there will most likely be too many branches to do it any other way.

By the way, nice diagrams.