1 - I'm aware of Lincity, OpenCity and OpenSC2k, but none of them are popular and/or are recreations, not full-up new city makers.
Most open source projects, at the worst, might involve UI design. And honestly you can see how bad that can get already when programmers start making their own interfaces without being "good" at it in most Xorg GUI apps.
That isn't to say there aren't communities around libre music, sound effects, game textures, models, etc - there are large vibrant communities around all of these. The problem with games in particular is that you need to reach across the aisle and involve people from all these niche libre communities to build something, and most of the time without the fundamentals fulfilled you won't be able to pitch or demonstrate a project enticing enough to attract participation.
Its a chicken and egg problem - you can't really get good artists if your game art is placeholder polygons, and you can't get someone working on the renderer until something is already rendering to the screen.