Programming language

I'm not the one who's going to program this, because I have exactly no extra time. However, I'm still going to outline your options so you can get things started. Please comment with the languages you know, your experience, etc.

Java:
You can do the whole thing in java, there are some libraries, but I personally don't like using it for graphics management.

C#:
You could easily use the XNA frameworks for games. Its pretty easy to learn and is pretty powerful.

C++:
You have a choice of many libraries. The SDL library is one that people use a lot and that could satisfy all your graphical needs. The SDL framework is not as powerful as XNA, and while C++ is arguably more powerful than C#, it's also harder to master.

Take your pick.

I would suggest some consideration of existing engines first, followed by libraries and language if no engine is satisfactory. Our requirements (particularly procedural generation) should help narrow the field quickly - possibly to zero.

Also we could make use of a scripting languages, content tools and configuration files to open up parts of the development to a wider range of people.

As far as languages themselves I don't have any strong opinion (I can work with all of those) -

I selfishly vote C++, because I'm not as familiar with the others...I'm going to be learning Java over the next month or so if possible, though.
An actual valid reason: C++ is inherently faster than Java, since it's compiled for a specific platform, and not interpreted. In addition, it's more portable than C#, which is, as far as a tiny bit of google-fu has told me, nearly impossible to use on a Mac. It also supports inline assembly, so if we have to we can write even more efficient algorithms, and as stated, has an enormous variety of libraries available.
EDIT: Plus, C++11 was recently brought closer to full standards release, and it has a ton of useful features for threading, networking, timing, etc. Even though it's unlikely that any compilers will fully support them, some of them will be helpful (range-based for loops, anyone?)

I would vote C++ as well. But I am definitely selfish.

In addition, it's more portable than C#, which is, as far as a tiny bit of google-fu has told me, nearly impossible to use on a Mac.

You missed Mono then, which is the portable, open source version of the .Net framework. It works on a Mac (Unity uses it and can make games for Windows, Mac and various mobile and console platforms).

On consideration the Unity engine is probably ill suited for this project, simply because the free version doesn't support version control software properly - which makes collaboration difficult. I'll probably still prototype some bits with it though because it is still an excellent environment for that sort of thing.

Given C++ then, looking at some engines/libraries - Ogre3D seems to be quite popular (was used for Torchlight), I've found Irrlicht to be quite easy to use as well although less feature rich. If we just want to do 3D accelerated 2D then SDL is probably sufficient. Raknet is a pretty decent networking library. Not sure about sound, OpenAL or fmod I guess?