I think the one argument for making DF open-source that everyone's forgetting is this:
Tag.
Imagine it.
CPM tag, with weapons, without weapons.
If DF became open-source, this would be a thing within a month. It would be the best thing to happen to Defrag since client-side entities.
Just picture 30 people on a massive map (probably one I made, since nobody else makes big maps, though I do need to work on real geometry
), all running around, rocketjumping, being awesome, while some motherfucker chases them all around. Manhunt, hide and seek, classic tag...
It would be a dream come true.
Please make Defrag open-source.
---
Now for what other people are saying: I think exploits are a problem, though if there was someone overseeing everything, they could brainstorm fixes and add them within days/weeks. Something like the wallbug wouldn't have to be banned half-assed via the site or the proxymode - it could be removed altogether, though doing something like that isn't recommended unless it's a bug much greater than that.
Cheating online would become a different entity altogether, though nobody does shit about cheaters already, and we have awesome scripters to fulfill all of our deepest fantasies offline.
Really, my biggest concern with everyone being able to make their own Defrag is that everyone who plays will split up even more. Just look at UrT - the developers are hated by more or less half of their community for the 4.2 update. There are just as many 4.1 servers as there are 4.2, and if that were to happen to Defrag, I would literally cry.
With all that said, though, the appeal of Defrag TAG is too great, and if there's any possibility of that happening, fuck everything else - I want that!