There's a trade off between processing time and storage space in pretty much everything to do with games. For example the lighting in a scene is often precomputed offline and then baked in to a texture which ships with the game. This increases the speed in which a frame can be rendered, but also means that your game just gained another few mbs in weight. Similar thing with animations of clothing, these are often physically based simulations done offline which are then baked in (again we often use textures to store the information, mapping RGB to XYZ).
If you were to generate faces "on the fly" as a level streamed off disk then that would likely take up too much of your frame budget and your game would grind to a stuttering halt. The other way of doing it (and this is generally how games which use procgen work) would be to either have a precompute step when you first install or launch a game. This might give you a long install or launch time and would still mean that you have a huge install size, but you would avoid taking up a chunk of your frame budget. Or you could do some clever scheduling and level design where you force the player through "tunnels" between areas that gives you enough time to generate a few new faces and load in assets before they enter an area. This is a pretty common technique where you need to load in a bunch of assets or do some heavy calculatuins. The Witcher 2 had an interesting and slightly buggy version of this where whenever Gerald opened a door to go from outside to inside the camera would swing around so you couldn't see inside the building, a second long animation would play and then when the camera turned back so you could see into the now fully loaded interior if the building. It didn't work properly but it was a good idea.
You could do what ms flight does and have a locally installed low resolution world and a high resolution streamed world. Adapting this you could stream in procgen'd faces and other items generated offline. I think this would work rather nicely.
Lastly, I know it was just an example but still, faces are probably the last thing you want to procgen with out passing the results by a human filter as humans are incredibly sensitive to them looking "off". If all your characters end up looking grotesque and off putting you might be shooting your self in the foot. See the furore about eFootball's terrifying crowd models.
If you were to generate faces "on the fly" as a level streamed off disk then that would likely take up too much of your frame budget and your game would grind to a stuttering halt. The other way of doing it (and this is generally how games which use procgen work) would be to either have a precompute step when you first install or launch a game. This might give you a long install or launch time and would still mean that you have a huge install size, but you would avoid taking up a chunk of your frame budget. Or you could do some clever scheduling and level design where you force the player through "tunnels" between areas that gives you enough time to generate a few new faces and load in assets before they enter an area. This is a pretty common technique where you need to load in a bunch of assets or do some heavy calculatuins. The Witcher 2 had an interesting and slightly buggy version of this where whenever Gerald opened a door to go from outside to inside the camera would swing around so you couldn't see inside the building, a second long animation would play and then when the camera turned back so you could see into the now fully loaded interior if the building. It didn't work properly but it was a good idea.
You could do what ms flight does and have a locally installed low resolution world and a high resolution streamed world. Adapting this you could stream in procgen'd faces and other items generated offline. I think this would work rather nicely.
Lastly, I know it was just an example but still, faces are probably the last thing you want to procgen with out passing the results by a human filter as humans are incredibly sensitive to them looking "off". If all your characters end up looking grotesque and off putting you might be shooting your self in the foot. See the furore about eFootball's terrifying crowd models.