I really find this to be one of Skyward Sword's better ideas. I think that with how you can either be friendly, neutral or mean to a person, you can possibly have different character relations. This would increase replay value to the game since it would be cool to see how each way you have Link act could affect the outcome of certain events. I'm not talking about enormous ones like deciding who lives or dies, but certain sidequests opening up for specific characters. For instance, friendly to someone and they may ask you to run a few errands for them in exchange for an empty bottle or something. Be rude to another and they may challenge you to a sword fight.
This opens up many different opportunities for the game and I feel that this could actually make the outcome of the game be better. This allows you to have Link reflect upon your own emotions, or even make a persona exactly opposite to your own. This can help get some anger out by being more aggressive to a certain character that you particularly dislike, or be kind to a character you feel sympathy for. I think this will give Link a group of rivals and of followers. Perhaps the followers will aid Link when they see him, helping him towards the end of the game.
The possibilities of how the outcome of each choice is is actually endless. This is a very good aspect that I think will help the game. In some cases I've been irritated with some elements, but this is one that I'm looking forward to.