In order to create a step-by-step guide to reproduce the error, I made a second install in a clean new folder and set up the exact same circumstance that led to the error before (i.e. opened up a world with dictionary entries, then asked about something relating to those at the first opportunity). This time, it actually worked for some reason, the AI managed to use dictionary content to make its response.
The bug still persists in the old install, but not the new one. Copying over the userdata folder from the old install to the new install caused the bug to appear. Strange and troubling. Currently suspecting that the formatting for the prompts (including default) got corrupted somehow.
I am going to do another clean install, import the things I want from the old install one-by-one, and see at what point the bug appears. If I do find anything fixable, I'll report back here.