Yes, that's right, it's already happening:
Progress so far
What's definately possible (and is easy):
Adding/Removing/Modifying dialog on existing characters with dialog
Changing any text in the game
Changing Character Portraits
What I think is probably possible, pending further research:Adding custom quests triggered by dialog on existing charactersWhat might be possible, but will take much more research/new tools:Adding new portraits to the list instead of replacing
Modifying/replacing character/item models
What might not be possible without deeper modification of game files (i.e. significant work):Adding new items
Adding new NPCs
Adding new companions
As a side-effect of this, I have come across some data that is a bit more spoiler-y about how the game might progress, which they have kindly left in the game's files for us to poke through and find! Note that these are spoilers! Don't discuss them in this thread, so people don't get unintentional spoilers (or at least post in spoilers tags!)