Case in point being the following disclaimer below, just read the bottom of this comments page:
By contributing…You hereby transfer and assign to Epic Games, Inc. all rights, title, and interest, including copyrights and other intellectual property rights, in such Information.
So this thread and all intellectual rights relating to the original question or any answers are now apparently the copyright and intellectual property rights of Epic.
So the question remains, if an individual or team develops a character (or characters) or other assets outside of UDK and then utilises the UDK engine to stage the character or assets for production, then, by accepting the UDK EULA and submitting the character(s) to UDK engine does Epic therefore claim ownership to the copyrights of the character(s) or assets by use of the term “submission” in clause 10 of the EULA.
Before we subscribe and submit our work to UDK it would be good if a representative of Epic/UDK could clarify this matter formally for us.