I replaced Animal Crossing's dialogue with a live LLM by hacking GameCube memory

This is awesome. LLM-powered NPCs is one thing I'm most excited about in the future of gaming. Characters repeating the same scripted dialog over and over again is one of the biggest immersion breakers.

I used to care about repeat scripted dialogue like you, until I took an arrow to the knee

Yep. I can see how relying on non-repetitive dialogue generated by LLM's will inevitably make us lose common ground scenarios that end up being memorable moments, like the arrow to the knee from Skyrim or "such devastation! this was not my intention" from Final Fantasy 14. A way to bypass this problem is to keep the important dialogue fixed, but this only one of the problems.

Another issue would be emphasizing the meaninglessness of the dialogue. For example, playing Trails in the Sky has lots of NPC dialogue that's repetitive, but at least the dialogue is relevant with how the NPC's life progresses in the grander scheme of things, such as having difficulty with her entrance exams, or having an argument with his fiancé. It's not main dialogue but adds flavor for anyone who cares about the world enough to interact with the citizens.

I don't think I'd like to interact with characters that I know whatever it is they have to say is generated on the fly and adds nothing other than random tidbits. The novelty would quickly wear off.