Does the server have to run headless, or can one person still run games locally on it while another has a remote session? That is, would I be able to play on the monitor/mouse/keyboard directly attached, while my partner has a session on a laptop?

I’m no lawyer so I could be completely off-base, but I think the existence of homebrew can make all 3 points defensible, depending on what evidence exists about their primary intent being breaking the DRM. If they have posted publicly things like “this patch should bypass DRM for this particular game” then they would be screwed, but posts like “supports/extends this feature so we can better emulate the functionality in this particular game” should be fine? At least if I understand the precedent set by the Connectix ruling in addition to the wording of what you pasted?