This is the theory behind statistical language models. See the reference section at the end of the article for more details on language models and their refinements. For all of the effort which dozens of PhD's have been putting into their work for years, speech recognition is nowhere near Star Trek yet. Even those smart enough to recognize complete sentences and equipped with language models will only spit out collections of words. It's up to someone or something else to make sense of them.
Speech recognition works best in quiet, controlled environments.
Trying to make it work in Quake III noise levels is not very effective. The larger the vocabulary, the easier it is to confuse a recognizer. If the vocabulary contains true homonyms, the system is in trouble. For some people, speech recognition just doesn't work, and not necessarily because of an unusual accent either. If the input equipment has trouble handling high frequencies, the recognizer will produce less accurate results, on average, for female speakers.