This paper presents recent development of a blending-based system that generates interactive narrative output. Besides expanding the GRIOT system to dynamically reconfigure discourse, we introduce a novel construct called a "scale of intentionality." As a cultural production, the first application of these advances is an interactive narrative of a character's daydreamed memories, intertwined within a story world. Our approach is technically grounded in algebraic semiotics, conceptual blending theory, computational narrative research, and is informed by the notion of critical technical practice of AI research.
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