Nathan, Theo,
You guys raise good questions (as always). Short answer is that hosting liability is not compromised, and I think Steven responded to the harassment policy inquiry.
That said, may I suggest that you put your points on the discussion page as you see them, and we will answer more comprehensively once we understand where the primary issues are. http://meta.wikimedia.org/wiki/Talk:Terms_of_use Going forward, I will probably limit my comments to the discussion page.
Many thanks. Greatly appreciate the inquiries and feedback.
Geoff -