LLM generated code is notoriously bad. Like, "call this function that doesn't exist" is common. Maybe a more specialized model would do better, but I don't think it would ever be completely reliable.
But even aside from that, it's not going to be able to map the free form user input to behavior that isn't already defined. If there's nothing written to handle "stand on the table and make a speech", or "climb over that wall" it's not going to be able to make the NPC do that even if the player is telling them too.
But maybe you're more right than I am. I don't know. I don't do game development. I find it hard to imagine it won't frequently run into situations where natural language input demands stuff the engine doesn't know how to do.