Microsoft is well aware of it, as the Gamerscore Blog mentioned it and pointed towards one of its lawyer's blog postings.

I'll go the route of the Gamerscore Blog and post what "DonkeyXote" (MS lawyer) stated:
"Many people are surprised Microsoft is "allowing" this.

Actually it's nothing more than the Game Content Usage Rules in action. When these were developed, people all thought they were focused on machinima. The truth is that while they do address machinima they also allow for a lot of other things. Mods like this are one of them. The developers aren't selling the mod, they're not monetizing Microsoft's IP, they're just creating something to share their love of the Master Chief on a new platform. It's a great thing for us and a great thing for the gaming community. And much though I love my friends at Epic, Unreal Tournament isn't Halo. This will also remind people of just how great the Halo games are and remind them that if they're done with the user-created faux-Halo experience, the real Halo is available only on the Xbox 360. And no one is taking characters from PlayStation games (do they even have any games?) and putting them on our platform..."

Who benefits in the end? The attention is good for Microsoft, Sony, Bungie and Epic Games, although probably not all the parties are particularly thrilled. Fanboys may be up in arms. I'll go with Peter Moore's new philosophy of "platform agnostic" and say that it benefits gamers. Power to the community! Hopefully Microsoft will open Unreal Engine mods on the Xbox 360 release of Unreal Tournament 3 so Xbox 360 gamers can get their share.

From Gamerscore Blog and DonkeyXote's Blog.

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