I'm not sure how your Torrent analogy applies. One is about creating a character, the other is about distribution.
For creating characters, do you mean something like City of Heroes?
In CoH you could make your own superheros based on a bunch of factors. The developer intentionally blocked many well-known superhero characters and names (eg. Wolverine) but Marvel sued them for trademark infringement. It was an interesting case, especially since Marvel created some of the violating characters and then sued over them. The judge dismissed most of the charges, and sadly the remaining ones were settled under undisclosed terms.
Another game with massive player-created content was Spore. People would generate fairly graphic and obscene things, dubbed "Sporn". The game developers were smart enough to see this one in advance and kept group of people to review the player-uploaded content. Even so, a lot of rather offensive Sporn made it through to public servers and the company had a constant battle to keep it in check.
The takeaway: When dealing with publicly visible player-made content you absolutely need some good business lawyers involved. Plural. You need to be prepared not only for those who violate IP rights, but also those who will do everything in their power to generate offensive and sexually explicit content.
Player-generated content can be fun, but it is also an expensive nightmare from a legal standpoint.