I agree that there has been a lot of interesting stuff about player/DM contracts in this thread. It's prompted some thought from me.
I think most of us (at least myself) started out gaming based on the idea that the DM was the guy who either volunteered or was nominated to run a game. After that point, the players stepped back and let the DM do all the work.
Under that model, the DM is obviously going to be put in the "god" role. He reads the rules. He explains the rules. He chooses the rules. Sometimes he just makes up the rules. No consentual baseline is established -- sometime not even a unilateral baseline.
Now, part of the role, by definition, of the DM is referee (the old AD&D books refer to the DM as referee quite a bit) and arbitor. I _don't_ think that everything the DM does, says, or computes should be up for debate, inspection, or review by the players. Usually, the most a player should say is, "That sounds wrong to me, can you check your math," or something to that effect -- basically pointing out when the DM is making an actual mistake.
The DM always knows more about the game than the players. Always. That isn't to say he's got an encyclopedian knowledge of the game, although proficiency in the system _is_ a good thing. The DM has the long-view of the campaign. He knows when some critters aren't what they seem or when an opponent gets an extra AoO because of Combat Reflexes. That sort of thing.
The basic rules, though, do form a sort of "laws of physics" in the game world. If the Flanking only comes into play after both parties have attacked the target, the Rogue had darn well better know of the house rule before positioning himself. Likewise with PrC requirements and so forth. _This_ is where I see the idea of "official" sources being useful. The group decides or is informed of what constitutes the norm of the rules and which variants are in place _before_ beginning play. If something changes for some reason (a "broken" rule is found, etc.), they need to know in advance. Anything else would be like living in a world of fluctuating natural laws.
To bring this back home, I've gotten some ideas on how I plan to do things when I take the reins in the next couple of months. The current DM is nearly burnt out after Dragon Mountain and RtToEE -- we're only waiting because I'm pretty sure I'm going to use a couple of major variants (Defense by class/level and one of the spell systems) from Unearthed Arcana.
Traditionally, in any group I've played with, the GM would just declare the system, the level, the world, and tell people what sort of characters to make up. If someone really wanted to play WoD, that would probably happen, but no vote was taken. Likewise, variants and house rules were the sole province of the DM.
I plan on actually sitting down and discussing things with my group. The running assumption, that everyone has pretty much bought into is a long-term game that will reach epic levels and will probably be the closing story for my 20 year old campaign setting. I'll find out if this is what they really want to do, or if they want something else.
We'll discuss what the foundation rules/books are and what sort of theme they want to see. If the decision is made to play my homebrew, then I'll be taking on quite a bit of the control as I want a certain "feel" to the story/setting. Otherwise, we'll see. If no discussion ensues, then I'll take it as a "we trust whatever you're doing" and proceed accordingly.
Once the discussion ends and the campaign begins, we'll switch to a DM-as-referree-and-arbitor mode. See the top of this post for what I mean by that.
Of course, that's only a plan. Still, it's what sounds like the "best scenario" to me.