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Just to recap, when creating a MUD, you absolutely MUST have the author's permission to use unique aspects of his work, including but not limited to original place names, scenery, objects, magic systems, and characters. Permission may be obtained via non-exclusionary statements on the part of the author.
If you want to get rid of that stuff in order to make your world original, then you absolutely MUST start from scratch; no amount of phasing out will make the world any less a derivative of the author's work, because you still used the author's work to get to that point.
IMO, the only way the Fair Use rule could even possibly apply to a MUD is if (a) the whole purpose of the mud is obviously not entertainment but rather scholarly critique of the work in question, and (b) the potential player base of all such muds added together is so tiny that the author could not possibly be losing a money making opportunity. Such a mud privately used by the owner is conceivable, though unlikely. Any mud listed publically, however, doesn't have even a remote chance of the Fair Use rule applying to it.
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