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Create custom spells
- Yes, Baardvark already made some for his Bard mod and the editor is not even released yet! (crazy man)
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New abilities
- Same as above
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New tags
- This I don't know
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create a new level up system
- I don't think so. The level up system is part of DoS2 core.
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create a new crafting system.
- Creating a whole new crafting system would be redoing part of the game. I seriously don't think that's possible
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create new creatures and races
- Sure thing with the editor if you have extensive modeling knowledge as Swen said in "insert one of the KS update"
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customize the colors and the shapes of armors and weapons
- This will be possible as for creatures
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bound sounds to objects
play a custom music during the game
- No clue about sounds and music in general frown