Rather then taking the standard MMORPG style model of IRC chat I think it would be interesting to see something done slightly different here as well. What OP suggests is a pretty good idea in that it would increase immersion in the game. People complain that it will make trading more difficult, but wouldn't trading be difficult? Think about if this was a realistic scenario, would you really be able to ask people on the other side of a big ass lake if they want to trade with you without the use of any telephones or other such devices? No, you'd have to take your trade goods over there and see if anyone was interested.

Not having the ability to negotiate trades from a distance would actually increase what this game is trying to do at it's heart which is to create a player driven community. Trading outposts would become even more vital and people would end up setting up stalls in order to trade goods. If you take it one step further and not set up a "store front" sort of thing like you find in Lineage II or Aion then you would even avoid the problem of people going afk with macros that spam "WTT X for y" every 10 seconds because they would actually be required to be a part of the situation. You'd also get a large amount of wandering traders that would go from tribe to tribe trading goods that people need without knowing that they need 400 nails or whatever. Also without the IRC style chat the constant pandering and barking that people do when they want to trade items won't be nearly as intrusive as it is in IRC chat as you can simply ignore the persons chat bubbles rather then having to physically ignore everything they say through the IRC or wade through the constant acronymical (is that a word) gibberish they spew.

I'm with OP, I think something like this would be an excellent idea and make a lot of sense and create a truly immersive player driven community and world with something that would resemble what would really happen given the circumstances. Not that it would ever happen though as I think too many people would be in an uproar over not being able to do things over insanely large distances.