There is no way this is not a derivative work of the engine of Diablo, assets or not it is blatant copyright infringement. That said I don't think Blizzard is going to make any attempts at enforcing it considering similar projects for other old Blizzard games.
It is. And it's mentioned at the bottom of the github page, too: "This work is being released to the Public Domain. No assets of Diablo are being provided. You must own a copy of Diablo and have access to the assets beforehand in order to use this software."
This seems legally questionable given that all of the source files have a copyright notice from Blizzard indicating distribution without written permission is prohibited.
No one is distributing them. If you have the content files, you can point the open source engine to read them.
The guy on Github is distributing the source files which have a Blizzard copyright notice on them saying not to distribute them.
Which is really weird. Because the code is reverse-engineered and I'm 99% sure the author used Hex-Rays Decompiler (due to variable names, etc).
Oh, sorry, I thought the comment I was responding to was nested under the 'freeablo.net' discussion, and not the main thread. You're right that this person is distributing stuff they shouldn't be. I'm guessing it will be removed from github shortly.