Game contents will be under creative common.
3d engine and blender are under gpl.

What will be the licence of the source code ?

It's open source, ok.
and free ?

Will we see this game in linux distributions ?

The CS engine is actually under the LGPL.

The game code will be open source and free, and there will be a linux, mac os x, and windows version according to Jorrit (the Crystal Space project lead).

LetterRip