It's not truly open source because it requires the original files, but then they've listed emulators for ScummVM and the Infinity engine, so I don't see the difference.
It hasn't for a while, since 1.0 - they have their own graphics and sound assets now.
Art assets are not software, if that's what you're talking about. Character design, dialogue, plotlines, etc. will remain under copyright even if you do go in and replace every image and sound with freely licensed art.
Stallman thinks all users should be able to share and remix artwork freely, btw.
I'm well aware of Stallman's subtle and well developed stance with respect to human freedom and software, art, and documentation and I think it's perfectly consistent and reasonable.
The Debian project has adopted a stance that everything distributed as a part of the project should come with a set of rights, whether it's executable programs, game textures, or documentation.
Every part of Debian must conform to the Debian Free Software Guidelines, even if it's just a text document describing a library. So text files are considered software in Debian for purposes of the DFSG. That's all I was implying by saying that Debian considers non-executable parts of a project to be software.