well i think this isn't only a thread to discuss about the story, (it has no sense to start posting the plot, if we still have to decide how the making the plot will be managed)
about copyright issue:
as far as i now, the laws are not completely strict, since (C) shouldn't be applied to nonprofit projects that don't cause economic damages to the copyright owners. Problem is that this can lead to ambiguous interpretations, and if you really intend to produce an fs2.5 or fs3 or whatever, and release it as a standalone game, I suggest to take more informations possible about (c) problems.
Some examples: some years ago Paramount started some legal actions against owners of startrek fan sites, with the intention of being the only Startrek source on internet. As far as i know they failed (but i don't know if the legal action failed or they simply considered that there were too many fan sites and that it was turning in bad marketing)
a couple of years ago Sony started a legal action against all the magazines with a title containing playstation, psx or other variants, for making moneys using the name of their console
Some years ago a member of the community forums of xwing posted a communications he had with LEC (lucasart entertainment company, different than LucasFilms) where they said that they was going to start legal actions against whoever found using without permission the original artwork of their games.
At the same time Lucasfilm maintain a friendly policy with the fan sites, like TFN, that host a HUGE collection of unofficial comics, novels, games, films etc etc.
Recently Blizzard succesfully closed a community project, similar to ours, for an open source RTS, because it was too close to its own games and because it could use the same file format of some of his games.
What I'm trying to say is that if you don't get money from your work and you don't cause economic damage, you should be ok, but still you can have problems, depending by the company's policy, and you will have more likely problems when you use artwork that costed em money/time.
I know that

always had a very friendly policy with us, I also know that interplay is surely not evil, but the point is that it would be better to reduce, and possibly avoid at all, any possible legal problem, to avoid working two years on a project that could be stopped whenever others want.
This is also the reason for Inquisitor some times ago was looking for the source code of the demo, since there was the possibility to distribute the demo artwork and therefore the possibility to distribute the mods as standalone game avoiding those (C) problems.
You can instead release mods, even when they use original artwork, since they require the original game to be played, and therefore not only they don't cause damages, but they also are be an addictive value to the original game.
Personally I think that, if we want to release this thing as a standalone game, we MUST contact first

and or interplay and ask them permission to use the freespace storyline and the original game artwork for a new free open source game based on the fs2code, as IIRC others did for another community project about a new descent game.