IP Implications of Microsoft's Do-It-Yourself Video Game Kit

An exciting rumor passed on by Kotaku alleges that Microsoft will offer a developer's kit enabling individual private users to create their own video games for PC's and XBox 360's. First reported on CNET, this is an interesting opportunity for game development, which has been criticized for recycling the same old ideas. On the legal side of things this raises apparent issues in copyright and trademark. Some of the initial questions I can think of are:

1. If put online, who owns the content? (Since the tool is likely to be a drag and drop set builder, could private users claim originality in their "creations"?)
2. Could Microsoft incorporate something in their end user licensing agreement giving them a stake in content created with their tool?
3. Could Microsoft create a right to the content by virtue of giving creators the playground to work with? - kind of reminds me of those people who build incredible things out of Legos; of course traditional Legos are too similar to basic construction materials, but modern versions come w/pre-molded licensed characters. Would Microsoft's playground be akin to modern or traditional Legos?
4. Will Microsoft provide their original content or licensed character properties, such as Master Chief from Halo or Joanna Dark from Perfect Dark Zero, for people to build new adventures around? What would be the licensing and use implications of that?
5. How would individual users protect original content they develop with the tool, and will they go to the lengths to do it?
6. On a global scale, how will international protection issues pan out for both private users and Microsoft (WIPO)?
7. Could Microsoft be held liable for any infringements of the IP of others by users of their building set?
8. Could we see more "mod controversy" like the Hot Coffee incident?
9. Does digital distribution figure into this? Ex/I create a kick ass game, decide to distribute digitally - do I owe anything to anyone and who will come after me?

These are my brainstorms for the morning. Needless to say there is a lot to consider and I'm sure that if Microsoft issues this tool we will likely need to answer some of these questions. PC gamers will look at this and say "big deal - stuff like this has been around for years - their called mods." Mods are kits or alterations made to existing PC games. While it is true that gamers have had the ability to modify PC content for years, this is the first time that a comprehensive tool would be available to the more popular gaming public at a price that most could afford, $100. Such a tool would encourage gamers to play in Microsoft's sandbox and pump freshness into an industry that is swelling exponentially, both in revenue and recycling of material (Final Fantasy XII? Can't we find a new RPG cult sensation?) In anycase, I am excited about the possibility of this product and would pick it up if it ever comes out.