I know that it's a lingua franca, and that there is a certain expectation that important information online will be in English - but even as someone who only speaks/reads English I think that's an unfair and unreasonable expectation.
Regardless of country, if you can't read and understand the rules/signage, you'd better have a 'native guide' or you're going to do something wrong and not understand how to put things right. That's as true for Libya/.ly as it is for Germany/.de or China/.cn.
I think that's the most important bit here, even if you understood the rules and had them translated and you abided (sp?) religiously (in this case that is to be taken literally it seems) by them, you could still lose your domain.
So building on a .ly is building on quicksand, and likely that goes for a whole bunch of other tlds.
I think that you're a lot less likely to run into 'oddities' in Germany than you are in China or Libya.
60+ years after the end of the war, it might not be immediately obvious, especially to an American used to 'first amendment rights', that your web page with screenshots from Wolfenstein 3D is possibly illegal.
And that's just an 'oddity' that I, someone who has never even been to Germany, know about.
Particularly in relation to their data protection rules (for example).
But you're also running a huge risk because if they find you in violation the fines start to get nasty. We had a client in the UK that was providing hit/redirect statistics, including full IP addresses, to German clients. Under the rules that is illegal - they were fined in the region of millions of euros for it.
I think it's ultimately a bit of a caveat emptor situation though: if they're not going to publish their rules in English, it means you're likely to get screwed.
Which is to be expected from a dictatorship run by a guy who dresses like the Beatles on the cover of Sgt Pepper's Lonely Hearts club band.