RE: similar game projects
The end result will be easier to mod than Fallout, but it's not going to be anywhere near the versatility of commercial games. The goal is to let the user create new areas, dialogue, quests, change item/weapon balances, but I don't know if things like say the skill system would be changeable. Again, it's not a big studio project.
RE: why not make it a mod of NWN (or [another game])
Whatever you make out of Legos ends up looking like a bunch of Legos stuck together. I don't like being trapped within another programmer's preconceptions of what a game engine should and should not be able to do, how it should do it, how much CPU time it should spend on this or that task, and how it should feel.