It would be very nice to see more elaborate dialogue in RPGs. It's something we've been wanting for years, who can deny that? This is a good proposal, and with a little polishing up it could be a key to a great game. I would suggest an alternative model for most dialogue options like this:
[Friendly] - the most obvious, a positive reaction which will harbor a good relationship with others of a friendly nature
[indifferent] - a neutral response designed to keep tensions from flaring or a simple acknowledgement of another character
[Aggressive] - a response intended to egg an enemy on, intimidate a weaker character, or an insult hurled at friendly characters
[Hostile] - a threat or accusation which will undoubtedly create a conflict with all but the most cowardly or passive characters
If the specific result of each option could change depending on the type of character being addressed (i.e. friend, enemy, citizen, soldier, lord) as well as modifiers from character stats there would be plenty of variety from as few as four options.