Sure, but look at what happened to Arc. There was excitement in the beginning, but since pg wasn't really taking patches (except bug fixes), the community forked the project and started working cool stuff on their own. Eventually, pg released new versions, which never incorporated the community fork's changes, so bit rot crept in, and people gradually lost interest and drifted away from the project. The project isn't dead exactly (is Lisp ever really dead?), but it isn't the hub of activity it was at the beginning.

I don't think dilution is main threat here. I think turning Dwarf Fortress into a viable open source community takes effort, and just letting the code into the wild won't necessarily accomplish much.