I'm sure I don't understand the distinction you're trying to make. It's not up to Microsoft to define what IP you can protect -- You can sue over misuse of your IP by anyone in MS-PL code: the only thing you loose by doing that is a FREE LICENSE TO THEIR IP.

This license doesn't affect your ability to protect your IP unless you release code under this license which is protected/covered by your patents. You get that? IANAL, but the MS-PL allows you to take the source of an MS-PL project, along with it's patent licenses, prepare derivative works based on your patented code, and distribute them without source under a closed source license without exposing your own patented code to this license.

As an alternate example, the GPL v3 is much stricter: if you bring a patent suit claiming the software infringes on your patents, your entire license is void, including the patent license. And of course, unlike MS-PL ... GPL requires you to distribute modifications under the same license, so if you want to make a derivative work, you have to also give away any licenses to any patents which cover any of the code.

A little paranoia is healthy. ;)

I think Microsoft is certainly going to use "Open Source" as a marketing and PR tool -- as does every other corporation which gets involved in Open Source.

Could they be perceived as the leader? I think they could actually become the leader, and not just in perception -- considering how much code they write, that's just a question of whether that's what they want to do or not. If they committed themselves to it, you couldn't stop them.

Would it be a bad thing if Microsoft (or another company) began to be perceived as a leader in open source development --if that perception was due to the huge volume of Open Source software they produced? I mean I hate to break it to you, but the FSF isn't exactly a leader in software development right now. What have you done for me lately?

You can bring patent claims, as long you're not claiming THIS software violates your patents. If you claim the software infringes YOUR patents, and aren't willing to allow that -- then you don't get a free pass on THEIR patents either. Ie: Share and Share alike. Also, your license for the software doesn't terminate -- just your license to the patents. Which brings us to:

So it's not a one-way non-agression pact. It's a two-way pact. As long as you don't sue them for patent infringement, you can (re)use all of their code without fear of them suing you for patent infringement... Of course, since THEY are the ones giving YOU the source code, this is really slanted heavily in your favor -- you can have a look before you use it, decide if they violate your patents, and THEN choose to use it OR sue them. They have no such recourse.