Private ownership was precisely the reason for the current situation. Finances change, and rights change hands whether we like it or not. If not NCsoft today, it could be EA or SOE tomorrow. The industry is rife with corporations acquiring rights only to bury them. But what is libre can never be taken away.
Slow response is a known and accepted side effect of open source - updates take forever, but at least we all own it. Unfortunately, for a game, with such a rapidly changing market, slow updates could be the death of a game. It's even worse when there are dependencies involved - how many times have you heard from the CoH graphics team that they would like to implement XXY but they have to wait for engineering to fix something first? What if there are 10 graphics team people on an open source project, but ONE engineer, and that engineer works full time and has a family; and says he'll get to it when he can because this is thankless non-paying volunteer job, and we'll just have to wait till he gets to it. A call goes out for engineers, but it goes unanswered for months. This kind of thing happens all...the...time in open source.
With a private venture, you know how many people you have, whether they're reliable and punctual, and you can add more people if you need to. I'm not saying open source is evil, it just has its place. In a game, it does not have the speed and agility necessary to maintain it.
That said, I do like Apple's model for iOS of community supplied content vetted and approved by a private company. That might work for a game in order to very rapidly add content without drastically inflating the size and cost of the game's development team.
Among things that can be community supplied content: In-game 3D objects such as buildings, small items, vehicles, plants; costume pieces, as long as they meet certain criteria; missions and mission arcs; art assets; You get the idea. Those things that are static in nature, and can be distributed rapidly along with game patches. Power sets themselves, I'm afraid, might need far more testing than the submission process can manage. Something would have to be worked out though so for instance we don't have someone design a new City Hall and then get angry and demand it be pulled.
Re: Modding and Cheating -
The problem with Modding is that it creates a difference in the experience of different players. When you create a world, you can't invalidate things like visuals. For instance if you tell someone the mission contact is the woman next to the glass train station, and that player hasn't downloaded the glass train station mod or the contacts mod, they won't find it because their contact is a robot next to a brick train station. Get the idea?
And cheating, while it's unlikely to be able to stop all cheating, accepting that it's commonplace and a part of the game will destroy the game. Players *will* quit over cheating if they believe it's commonplace and giving lots of other players a large advantage. I don't believe obscurity solves cheating problems - server control, and validating everything sent by the client does. Nothing is ever a perfect way to stop cheating, you can just make it so difficult that nobody will bother. Especially if there's no "profit" in it.