Will this be allowed?

I'm considering creating a new site based on ODP data which will enable users to submit new sites.

So, I'm thinking of importing the odp data into my own db, and then add more sites as I go.

I'm thinking of using phpODP as the engine, and of course the thumbnails will come from thumbshots.

Of course, all parties will be attributed properly.

Yes it is!

The Open Directory License states that you may certainly use the ODP data the way you describe, as long as you comply with the conditions of the license.

In particular, you must provide the attribution statements, and if you modify the data (e.g. by adding data), you must include a statement indicating you have made modifications to it.

You also need working links back to the dmoz.org site, both for suggesting a new site and for applying to be an editor.

These links must take you back to the right category too.