There are some stylistic things I'll change, but the basic idea's there. With a simple Hot/Not interface, the thing will learn what kinds of stories you like, and suggest characters and settings you're more likely to be interested in.
The rings to the right gradually fill in as the engine learns more about the kinds of things you're attracted to, appearing at first as a random scatter of squares, and progressively as concentric rings of information.
The outermost ring has one square for each name you've Favorited, the second for characteristics, the third for miscellaneous tropes, and the innermost for settings.
Set you kid up with the iPad for a few minutes and when she's done you'll be able to compose a story with all her favorite elements - but something unique and surprising every time.