Yeah, I agree. I was a 3rd country indie and strongly believer of UGC. I still am, but not in the mod sense. Modding is useful only if you want to break into the games industry, but that's it. And only the 0.1% of the good mods generate good game developers.
On the other hand, if you have "fun" tools for users to create content, they WILL create it. Like in Little Big Planet, ModNation Racers and others. It's amazingly hard to make a game, and amazingly harder to make a tool that is fun to use. And with this "fun tool" obviously you strip down all the publishing barriers (technical and legal) that "common game development" have.
On the other hand, if you have "fun" tools for users to create content, they WILL create it. Like in Little Big Planet, ModNation Racers and others. It's amazingly hard to make a game, and amazingly harder to make a tool that is fun to use. And with this "fun tool" obviously you strip down all the publishing barriers (technical and legal) that "common game development" have.