It indeed isn't a 'quake 2 mod', and it's even quite beyond Quake3 if you look at engine capabilities. It's based on QFusion, which was originally based on the Q2 sources, but which has been improved and expanded quite a bit...

Well, depends what the law in your country (or state) says. Here in Belgium, standard contracts in ICT industry include a non-compete agreement, but employment laws have a lot of protection built-in for both employer and employee. Here, there is one big catch for the (former) employer, the law here says: if they don't want ex-employees to work for a competitor, they have to pay them for not working for him.

The law doesn't allow them to stop someone from making money the best way he or she can. This means, that if your former employer chooses to enforce this, they have to pay your (new) paycheck + an additional damage fee every month for the period this non-compete agreement is valid, or until they choose to stop it. Legal notice periods for firing someone apply, which depend on how long the person worked there.

After that period is over - you can do whatever you want. For this reason, it's almost exclusively used for sales-people who can take (big) clients with them.

I've been in exactly the same situation, I also started a new company with a few collegues when we left my previous employer. We also rewrote one of their 'products' from scratch and heavily improved it. They found out but chose not to do anything.

Offcourse that's all law-related - so it's simple: ASK A LAWYER.