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RE: On the Legality of MxO EMU
As long as nobody is profiting financially from the project, there shouldn't be a problem. With MxO having been shut down, there is no longer a EULA and hence no applicable contract between SOE and MxO subscribers.
And since Morpheus is rebuilding a server from scratch, he's not using any of SOE's proprietary tools. He's using a game client that he purchased to connect to a server that he wrote.