I remember the days when I played Ultima Online. After years and years of analysing the datastream, a couple projects emerged to create a private server that would work with the UO client. It's no small task.
I would say the first thing stopping someone from creating an alternate "live" is time and interest. Anything is possible, whether it's worth someone's time is another story. It seems to interest you, why not make the effort to learn everything you need to and then do it.
The second thing is probably that reasonable alternatives exist. With tunneling software like XLink/Kai you can play many games online against friends/others. And for the most part, they work well.
Third is the expense. To actually run servers and pay for the hardware, internet connection and bandwidth would become expensive. Expensive enough you'd probably be forced to charge for the service... and then why not just use live?
It's just not worth someone's while.
As for the Live from HD question. You know, the only REAL reason not to turn off the mod and play Live from original media (other than potential ban because we don't know with complete certainty how the banning works) is for the sake of piracy. Seriously, if Kai isn't good enough and you really want to play Live, then people just need to kick out the cash for originals. Anything else is just trying to justify piracy.
