That’s rather short-sighted of them.
Pointless anecdote: I submitted a game for my 3rd year final dissertation as well. It went on to become Alien Flux, in a manner almost entirely the opposite of Runescape. Ahem.
Cas 
Why the banning? Any reasoning beyond “rar games are dumb!”?
I don’t recall whether anyone told me the official reason. I think my director of studies may have commented that a dissertation on a game would be unlikely to get good marks anyway. I don’t actually know what aspect of RuneScape Andrew’s dissertation was formally about; I would hazard a guess that the networking may have been a significant part of it, because I know that he implemented non-blocking socket IO for that before it was in the standard API.
Yes, you could make a game like the ones listed above, you’d just need time, patience, and the right gaming libraries.