Thanks a whole bunch for the update, Tony!
And I'm glad so many former devs have found other work-- even though it breaks my heart to see them all broken apart like that. And it sure doesn't look like there's much of Paragon Studios left to bring another game to fruition through kickstarter or what-have-you.... Oh well, I'm glad they safely landed on their feet, and all those others games will be so much better off for them all being there....
Having worked on such issues with software this isn't necessarilly the problem one might think. They will need to erect a 'gardenwall' - essentially the team doing the disassembly cannot provide knowledge or technical basis to the team doing actual development. The design/development teams will need to work off a type of 20 questions kind of arrangement when doing the reverse engineering this insures that none of the original IP is actually used and that patentable or trade secrets are not stolen. Basically from a legal perspective it's perfectly legal for you to create completely NEW software which does the same thing - you just can't copy it. This, of course does not apply to specific design, art or copyrighted works. But something like a server technology, since it's already arguable that the work you're creating from is already copying someone elses concept... let's face it, client/server technology is not exactly new, we've had it for decades - so long as you're not directly copying it, and you're creating your own 'NEW' client server tech... you're in fairly good shape.
Now, as to the features and content for the client - you need to be careful. There's a lot of design stuff that has to be very carefully vetted to insure that it isn't shared with your design/dev team. The same applies for the database section of the 'server' application. But with a bit of insight and care you can often make a far superior product since you're not limited to the design descisions which were used in the original.