- In some places, yes. It varies from state to state and company to company, but most companies outside of California try to do this to you. (In California, this clause is illegal.)

- Move to California or negotiate a different contract. (It depends on if your employer wants a cut, how far they are willing to litigate, and if they can show they missed out on economic growth that you made (depending on the contract clause); you should always ask permission, even before contributing to open-source projects.)

- Yes, it is. While it is unclear if Carmack actually stole code from Zenimax, the actual evidence is easy to construe in Zenimax's favor, e.g., Carmack backed up all of his emails, many of which included attachments of VR code, before he quit, and the Oculus founder had an NDA with Zenimax while working on VR with them before starting the Oculus kickstarter. (I'm not sure about the situation with the rocket hobby.)

- Obviously this is the answer: talk to both internal and external council, and remember that internal council will be the people suing you if they get unhappy.