Is there a way to change a game so that the arrow keys are used for movement and other buttons are used for talking/walking/etc. to somthing that you are facing?
With AGS, all things are possible ...
You may be interested in strazer & Rui's Keyboard Movement Module (http://www.adventuregamestudio.co.uk/yabb/index.php?topic=22724.0) (for obvious reasons).
For the rest ... I suppose regions/hotspots could be used to check where the character is, and on_key_press() used to carry out the interaction. Depends on how exactly you want it to work, but yes, it's certainly possible. Magintz's Text Parser Template (http://www.adventuregamestudio.co.uk/yabb/index.php?topic=9435.0) might give you some ideas on working without a mouse.