The gameplay M&B uses is probably copyrighted.
No it's not.
And it was made by two people from what I know, Armağan Yavuz and his wife.
Overgrowth, a fighting game with nice physics, is a project of company called Wolfire games which constist of five people. I think that only one or two work on game engine...
My point is, it's not that hard to create a combat system similar to what we have in M&B if you know what you're doing. And I think that cmpx (alone) could make it if he wanted to, had time, was payed enough to do it etc.
Also, forget about high profile game engines like CE3, UE3, Frostbite 2.5. Those cost to much to licence. Only if c-rpg previously made as mod for said games, win a reward for the best mod and they obtain engine licence as reward.