From my non-lawyer reading, it looks like it should be OK, assuming you abide by the other restrictions (export controls, not for profit, etc)
, ID grants to you the non-exclusive and limited right to distribute copies of the Software free of charge for non-commercial purposes by electronic means only and the non-exclusive and limited right to use the Software to create your own modifications (the “New Creations�) for operation only with the full version of the software game WOLFENSTEIN™: ENEMY TERRITORY™; provided, however, you shall not make any New Creations unless and until you have agreed to be bound by the terms of this Agreement and of the LIMITED USE SOFTWARE LICENSE AGREEMENT which accompanies the full version of WOLFENSTEIN™: ENEMY TERRITORY™.
Certainly that seems to be the intention, and previous quake3 and et mods have distributed their source without getting into legal trouble. Attempting to re-license or claim ownership to the original code would be another matter.