That... sounds again like a clear case of EQ being inspired by DikiMUD, and people misreading that 'based on' meant 'somehow got ahold of the source code'.
The 3D graphical nature of the game would likely have made a text MUD codebase transition even harder than building one from scratch, honestly. Height maps, 3D models, terrain, architecture, sound effects, animations for each and every race and gender, different textures for each one, item icons, item model graphics, water/fire animations, spell particle effects... None of those things would have come from a MUD.
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