This would be far from the first game with randomly generated quests... so this isn't exactly a technological breakthrough. Even in the TES series -- Daggerfall made extensive use of em, IIRC (dunno about arena).
However, a random quest is not necssarily a bad quest, and I'm all for content that pushes you to explore every corner of the world. A generic quest that takes you to a new place or to interaction with new NPCs will still be interesting to play, especially to the extent that NPC and enemy AI is rich enough to make for some "emergent gameplay", as the indusrty calls it, that is, interesting unscripted events.
So, yeah -- good news as far as I'm concerned, provided of course it's well-executed

And even if it ISN'T -- if there's a system in place, then modders should be able to make new random quests as well as new scripted ones, which could be an interesting challenge!