Totally get the creepy part, but my criticism of devices like this is that they seem to be made by people with limited exposure to the creative power of children.
Children don’t need this; they are so much more creative than an AI (and the adults that trained the AI), and their creativity is fueled by boredom.
I feel like it would be creepy if the kid was using it without anybody ever checking up on it ... but I think all of my friends with kids would say that the answer to that is "parenting."
I mean, giving a kid an unlocked iPad and not bothering to do basic supervision can also have really creepy results, so I'm unconvinced that something like your work actually makes anything worse in the negligent parenting situation, and seems like it could be a lot of fun in the competent parenting one.
If you haven't already done this, I'd note that I can think of a number of parents who would probably rather enjoy a version of story mode that let them collaborate with their child and your code to put together a bedtime story before they turn it off for the night and tuck the kid into bed.
> with limited exposure to the creative power of children.
This is true, I am not a parent. But I have some domain expertise in building a conversational toy... talking to many parents and having been a child myself for several years has helped