Yes, but at least they have established worlds to work with. Ranma is a published work, Sailor Moon is a published work, and thus fanfiction has something to work off of.
What I meant by the "VS game" comment is, MUGEN is a way for players to set up "dream matches". In other words, they didn't happen; we just played it like it did. Basically, without the author explaining the world he sets the story in (giving background, et al.), the audience is left going, "WTF is this?"
So, since there's no published "MUGEN world", and no series to base it on, the setting is all the author's call. The characters used in it are often taken from a "valid" series, though.