Artificial Intelligence In Halo 2

How Stuff Works has an interesting Interview With Chris Butcher the lead programmer behind the Halo 1 & 2's AI. I found it to be a very interesting (nontechnical) read.

One of the concepts he mentions is the Uncanny Valley.
What he says is that moving from computer generated looking characters (Half Life) to photo realistic characters (Half Life 2) there is an area where characters sometimes look believable, but at the sometime they can also look unbelievable because they are almost photo realistic, but not quite.

So in combat the player might entertain the possibility of them being real in a virtual sense, but when combat breaks and they are playing out of combat, the characters have the possibility of acting unnatural. It brakes the gameplay experience because the player realises that they are not real and that they are just Creepy Looking Dummies.