So...what I'm getting is that you remove States (already done for us by the time of i24) and a handful of other characters and you're in the clear? So I could still fight against 5th Column and Devouring Earth and Rikti (probably not Arachnos) on a legal server?
No. Any server that uses any of City of Heroes's assets that aren't public domain or otherwise expressly excluded from copyright law (for example, game mechanics) would be infringing on their intellectual property (IP). This includes signature characters (Statesman, Positron, etc.), enemy and ally groups (those your mentioned), place names ("Atlas Park", "Talos Island", etc.), and art assets (images of any of the previously mentioned, plus things like the music scores). You
may be able to get away with one or two incidental infringements ("But there's a Perez Park in Wyoming!"), but worst-case scenario, if it goes to court, the standard will be: Does this infringement lead average people to think about City of Heroes? If yes, then it's over the line.
That's not to say that no one will ever create a server that replicates those things, but if they do, it would almost assuredly have to be kept a secret since if it became publicly known or NCsoft otherwise found out about it they could legally have it shut down without too much fuss or muss. Also, copyright laws in other countries are a bit more lax, so it may be possible to get away with running one somewhere else, but of course then, you face the issue of bandwidth and latency typically being slower. It would also depend on how willing and able the government of wherever it's being hosted is to go after infringers. In the U.S. and most of its close allies, most service providers are of the "shut down, ask questions later" mindset that isn't amenable to people breaking copyright law.
That's not to say that NCsoft
will fight back, of course. Some have speculated here that NCsoft wouldn't bother. My personal belief is that it depends. If NCsoft honestly has the intention to never develop anything CoH-related again, they may very well just let it go. However, I honestly think that's unlikely for a couple of reasons. First, the hoops they'd have to jump through to get an infringing server shut down are
really minor, especially if it's in the U.S. All they'd have to do is send a letter to the provider, and unless the person fights back (which they'd have no legal standing to do), they're done. Also, an intention to never develop anything CoH-related is
much different from a lack of intention to develop anything CoH-related, the latter of which I believe is most likely. If NCsoft merely has no plans now but want to leave the door open just in case, they might crack down on it just to protect their future interests--and businesses almost always want to leave as many doors open for future development as possible.
On the other hand, if someone runs a compatible server that doesn't infringe on NCsoft's copyright, then NCsoft really doesn't have any recourse. That's where most emulated servers go wrong--they don't just emulate the game mechanics, they emulate the IP as well. When you read about a server emu project being shut down, note that they're not done so because it's a reverse-engineered effort that's compatible with the game client, it's shut down because it includes the IP from the original game. They're shut down for infringement.
I mean, they could try going after someone who does so, but as VV mentioned (and I have, in the past!), there's established case law that creating compatible server software and/or reverse engineering software to allow people to use the software they legally obtained is legal. If someone were to fight back--and now they'd have legal standing to--then it could cost NCsoft a lot of time and money, plus the embarrassment of losing a lawsuit that sets a pretty clear (and
very unfriendly to the industry) precedent. Even if they could win, for their own sake, the risk is such that I don't think they'd pursue it because they'd have very little to gain and everything to lose. The story might be a lot different and the risk worth taking if someone were reverse engineering the Guild Wars 2 or Blade and Soul server, something that would really hurt them if it got out.
But you (and everyone else)
really have to get out of this mindset that reverse engineering the server is tied to the content that is created for such a reverse engineered server. From what I know about the original game, all of the content was contained in spreadsheets and scripts that weren't baked into the system. From what I know about the non-SEGS reverse engineering effort, the same will hold true. Yes, content
could be created that duplicates what was in City of Heroes before. But it could also be created to infringe, for example, Marvel's IP by including the X-Men, or DC's IP by including the Justice League, or anyone else's, in which case the person or people running the server would be just as much at risk from those companies as someone who includes City of Heroes IP would be from NCsoft.