I spoke to Nimrod about this, and it seems his idea is for an UT mod based on JJ3 but using completely original content. This would not be illegal or a breach of copyright. It would be illegal to include data from the JJ3 demo in the mod, but if all artwork, characters, levels, and sounds are original work, it would be fine.

Edit: To clarify, the content in the link that Nimrod posted is still illegal and warranted FQuist's edit. The eventual goal would be to create a version that includes no content from the JJ3 demo. As of now, though, this does not exist, and the current version (using the Unreal engine and JJ3 skins/artwork) is still illegal to download or possess.