Eliza meet Milo, a real virtual character

Can you meet a real character in a virtual environment? Don't answer that question until you've looked at this video, which Wes recently passed along to me. The natural dialog in it is made relevant in part by a brand new full body controller from Microsoft that eliminates the need for any physical connection between interlocutor and avatar. And great strides in natural language processing and media interfaces make possible the many dozens of subtle visual and aural cues that contribute to the expressiveness and intuitiveness of human-to-human interaction. Is the character real? Here's the standard: the avatar may be two dimensional, but the emotions we feel are full-bodied. [Update: the right third of the embedded video may be cut off. If so, view it full screen.]   


Wikipedia: Eliza, Pinocchio