The PBEM Engine is licensed under the GPL - version 3 or higher - and is therefore Free Software. In a nutshell: you can use it, share it, change it, and share your changes (however all changes are covered by the same license). The GNU website offers a clear overview on their Quick Guide page.
The use of the GPL has a significant consequence for Rulesets developed for the PBEM Engine. A Ruleset is also written in Java and extends classes of the PBEM Engine. Due to the dynamic linking that takes place between Java classes upon execution - your Ruleset is a derivative work of the PBEM Engine, and therefore also covered by the terms of the GPL version 3. If you release your Ruleset, you may only do so under these terms.
This reasoning follows that of the authors of the GPL, as indicated in the link to their FAQ. Had the Engine been a source code or program generator then the GPL requirement might not have applied. The same would be the case if PBEM rulesets were written in a scripting language interpreted by the Engine. But since PBEM rulesets are plugins rather than scripts or generated programs, the full consequences of the GPL regarding derivative works apply.
Both the GPL and the plugin-like architecture were chosen specifically for this purpose - to stimulate the creation of free software PBEMs.