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It can work. Old School RuneScape runs almost entirely on nostalgia, but the community voting system they have for introducing new content keeps the game alive and fresh, even after 20 years.
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Yes, but Jagex owns all of the IP there. Turtle can't use Warcraft's... world.
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if the main product is nostalgia then it’s a derived work and you don’t get to claim moral superiority.

if they created genuinely novel mechanics that can stand on their own then they should do that.

Like you said, DOTA2 was a 1:1 mechanical clone but built from scratch without relying on Blizzard IP. League of Legends was a spiritual sequel with new IP.

Almost all fan projects that get shut down are 99% derived IP and 1% original. That will never fly. Nor should it.

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Instead we get every game reinventing the wheel a thousand times. They all end up similar, because the base takes all of the effort to create, so the innovation on top ends up essentially being noise.
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