There are different aspects of how an LLM can be used; allowing the user free-input of English is clearly one way that those sorts of interfaces can be significantly improved.

Current parsers are much better than the ones from the 80's. By the 90's they were improved a lot and they will still run in a 486. For instance, most *.z8 adventures from IF Archive (the decent ones) will parse stuff like "Do X, and then do Y and Z and J it.

That's not going to compare with a top LLM, though I guess it's ok if restricting to offline local options.

The game described in the article is something I’ve done in ChatGPT 4 months ago, its just a prompting problem, it can persist characters across rooms/scenes and keep an overarching story or goal

Any amateur IF writer with Inform6 (don't even start with Inform7, where you are basically hand-guided to do very complex tasks) can do much more than you did in weeks but without coherence issues. Ever.

Go play some decent and complex IF from Anchorhead to Spiritwrak, Curses/Jigsaw!, and you'll understand what a proper adventure and its object interaction actually are. I7 and its libraries allows to create stuff like Counterfeit Monkey, where you LLM would suffer a lot trying to implement that semantic monster. And yet, it will run in a Pentium II like nothing with a Glulxe interpreter.

Challenge accepted, but not for free, would you say there is demand for this kind of experience?

Most text adventures have been curated over 30 years. From a 486, Pentium II or a tiny Rpi A/B, most top IF games from the community will surpass by large the pseudo duct-taped environment (if there is any) an LLM would create.

Zork came from Dungeon, and it's nearly 40 years. Now, the 90's. By just 1993 with Curses!, any DOS/Linux guy with a 486 could play (and still do) pretty complex games with far more interactivity than a current free roam game except for Minetest/Minecraft. And, even with MC, there are some text adventures with pure alchemy on it, allowing to craft new objects inside the game. And, I repeat, playable under a 486/Pentium without any effort.

If someone created a text adventure with the requeriments of a Pentium II/III, it could basically host a whole MUD but for a single player and tons of actions and methods to solve puzzles.

If we ramp up the requeriments for a text adventure being a Pentium 4/SSE2, you basically get Cataclysm DDA but with a text parser and 200X of stuff to do ingame, as it would not be restricted to have to render the whole world each turn. You would get procedurally generated puzzles, NPC's with personality traits, emotions, and even a relatively complex grammar on subjects. Like the IF Galatea, but in a free roam world, with NPC's interacting with each other shaping the world dinamically.