Looks very cool :-)
A downloadable tool
Yarnspin is a simple story-telling engine, with its own built-in scripting language and graphics processing, turning hi res photos into palettized low res pixels.
There is a custom script language, which allows you to define dialogs with options, and set up locations with descriptions and images. It comes with a thousand portrait images, and you can of course add your own.
This is a first beta version, and I would love to get feedback on it, to learn what should be changed to make it more useful. The source code is included and it is all public domain.
There is no documentation yet, but it comes with an example "game" which is also a tutorial explaining the key concepts. Check it out :)