Of course, Milo isn't a true AI; he's just a big box of dialog options that responds to tokens in speak, movements, etc. He'll do whatever he was programmed to do; nothing beyond that.
Sure, Molyneux isn't worried about anything "inappropriate", because they didn't give him animations for slitting his wrists or sucking a cock (though, can you give him a lollipop to suck on?). The ESRB isn't going to blame him for anything. Of course, that doesn't preclude him from doing things that are inappropriate in context, and people WILL blame him for that when it happens.
Svenparty said:
This Youtube Comment sums up my feelings overall:
I wonder how Milo will react when I show him my penis.
"Hey Milo, take a look at this!"
"Wow, that's great! Can I touch it?"
*Scans penis on natal*
"You know, you can put that in your mouth if you want, and if you suck hard enough, magical cream will be your reward!"
"sounds good!"
These are exactly the kind of inappropriate behaviors that should be possible. It's even better when he repeats part of what you said (Eliza-style). Obviously, he doesn't really understand what you are saying, so you can trick him into responding how you want. How does he know the difference between a lollipop and a penis? Sure, they may have programmed him with a blacklist of words that are "naughty" and have him respond appropriately, but what happens when I make up a word? "Milo, how do you like my bangsnacker?" "That's cool! I wish I had one of those." Their is no way they could have anticipated that word or its meaning, or any other random word I make up. If they really went overboard and allowed him to "learn" words by asking about it, you could teach him that it means whatever you want. It's all about context, and until true AI is discovered (it it's even possible), context will never be understood.
Even further counter to his promises, hackers always find a way to work around the system. Even in everyday life, we do things which we think are harmless, but taken the wrong way, are inappropriate. It's only a matter of time before somebody finds a way to make him say something silly.