1) As a linguist, I do not believe that it would be very hard to simulate language, especially in the context that I have seen in my Dwarf Fortress years. There is a file in your game which acts as an index, which can be seen here [DF wiki]. You can go ahead and edit the languages as you see fit.
2) What you are witnessing here is called emergent game play wikipedia.
Hmm, yes, I guess I didn't qualify my questtion/comment correctly. I'm a TV writer but once upon a time I got a CS PhD -- I'm no linguist but i have some experience in NLP and related fields. Which is to say that I've seen a lot of machine constructed language. I was remarking that there's something special about what DF does that I can't quite put my finger on... it's better than anything else I can think of except some of the very new cutting edge stuff coming out of Fei Fei Liu's lab. I would imagine that as a linguist maybe you could see what it is... it's some kind of expertise that the designers have encoded... some intuition they have about which words to include and what kind of grammar to use.
Like it's not even remotely close to the only procedurally generasted naming system but the names it generates. They're so rich that they beg you to start building a story around them. The magic here isn't technicasl (I don't think).. it's poetry. It's some kind of understanding about what words do what things when...
It's weird, I remember listening to one of the podcasts they used to dp and someone was commenting on how well his pathing system worked and they wanted to know what his trick was..and i had noticed it myself... it does work well... and he was like "iuhhhh, it's just A*... and I think.I put in a tweak or two that I can't remember.. but really it's A* and I remember thinking that those tweaks might be more impressive than he realizes. I have a feeling he just cobbled together a straight-forward grammar and didn't realize that there's something about his touch that makes it different.
@PatrikLundell Thanks. I know about the thread. I guess I was more interested in what has been said in the past but even more interested in what thoughts other players had about these aspects of the game.