SHEETA'S PROFILE

The same thing is already mentioned in the Forgotten eBook, but OK.
I tried this sort of thing in my first project and found out that it is unnecessary. Come to think of it; would you ever talk two times with the same NPC if he is not important for the plot? And even if you do it, would you recognize that he says something different than the first time you talked to him?
The answer for me is NO.

The only thing where I personally use variables connected with NPCs is before the Hero enters a town. There I used to give five possibilities where the NPCs are located, what they are doing, what they are saying and so on.
So if you enter a town, you branch whether the variable is 1, 2, 3, ... and with every number the NPCs are doing something different. That could be recognized by the player. It isn't really necessary either, but in my opinion better than just changing conversations. But I can promise you, it is a lot of work, especially if you use a larger random for your variable. ;)

Where I can agree with you are the extra tips, but for me that's clear. However, I hope that this will be read by a lot of people, because a lot of us haven't made out the importance of good NPCs for the atmosphere of a game ...