David Braben himself called the iPhone a "pile of rubbish"
So the idea of a complete new game sounds better and better... (I don't want to go to jail...
Actually, he didn't call the iPhone a pile of rubbish he was referring to the "majority of games" which would be consistent with his high opinion of his prior work and an indicator that he probably would pursue something on this if he felt he wasn't getting a fair shake.
As far as going to jail...not the normal consequence for loosing an IP infringement case. Usually that is all about money...
As to designing a new game, you could certainly do that, and if it's interface and mechanics are different enough IP wouldn't be a problem. Additionally you could incorporate some of the OXP functionality via the in-game content purchase mechanism. I don't know if you can set those to $0, it just would make it so that users could pick what items to add into their game.
I think there is quite a bit of merit to developing a new game that takes some game play elements from ooLite, and I think that there are some other game elements that could be incorporated into the play. Multiuser economy impacts like in the old TradeWars BBS game and in some of the online RPGs floating out there. Send me a PM, perhaps there is something worth pursuing here.
If you take the cat away from the grin you are simply left with a
What?!? Of course all cats are
! What a stupid question.