Redistribution - possible, but it will get synced to the current version anyway.
The only worry we have is with you having the base engine which is used across any DLC made for OT that is on the clients pc, would this not limit the modifications we can make to the engine to make it suitable for the game's needs?
It certainly will limit you to some extent. But the goal is to achieve good performance and especially smoothness, avoiding jerking and similar issues, and allowing coexistence of multiple addons. This mainly applies to the global world simulator, where you can have multiple addons from different manufacturers and it all must be functioning together. For that it's important for OT client to have the control of the game loop, insulating the modules from such basic chores in order to guarantee the system remains fluid. There's a lot of specialized functionality in OT that takes care of that - controlled asynchronous tasks for loading of data, that are executed in a way that would prevent congestion of resource access etc.
The APIs will allow you to write loadable modules that contain the game code, that get's regularly invoked (and measured to give you hints about erroneous conditions and delays). In that sense it's of course more constraining that your usual engines.
But also other things - lots of stuff is optimized and thus made fit to the scenario we are using. That means there's no arbitrary freedom in what lighting and shaders are used, for example. Simply, unlike most of engines, this one is specialized - it has to be, to achieve its goals.
... but with the content servers that you will be hosting would each DLC get it's own server or would they be shared. If they are shared would there be a way of getting one (or more) servers that are dedicated just for our game say for an annual fee on top of the royalties?
To explain - we are running the server on a cloud service, and its purpose (apart from account system management) will be also to manage the static content you create for the instance of your world. Say there's a prehistoric realm of Earth, and you base your world instance off of that. You would get an instance that is going to be managed by you, meaning that you can grant other users the privileges to design there (or to play or whatever roles there can be). As a group you would be creating your world, some importing models that would be registered on the server and made available to other members, some creating scripts or game modules that would get registered and distributed automatically in the same way. Suppose you have a tester somewhere far far away who would sit down behind the computer and log in, selecting a revision to test. Modules and stuff will get downloaded from our servers automatically, and he can go on. So far its all been handled by us, but if he needs to test multiplayer, that would be in your charge, but basically all the data that are not realtime MP stuff can (and should) go from us.
Obviously all that transfers cost something, so if it's excessive there would be some extra fee.