I'm not a lawyer, and I hate to be a party pooper, but I would assume you and your circle of friends have already technically broken copyright law. Even if you disable downloading you still don't have broadcast rights - unless you've paid for a broadcast license from
ASCAP and/or
BMI and/or
SESAC (as I understand it, most music is licensed by one of these companies). It doesn't matter if the music you're sharing is on a private or public network - you do not have rights to share copyrighted content with anybody, even if the content was purchased legally.
My advice to you is to NOT expand your userbase, unless all of the music on your site is there with the permission of each copyright holder (as is the case of the
Subsonic Demo).
Personally, I've only created accounts for just a few other people that I trust. After they told me they shared their logins/passwords with their friends that I don't know, I changed the dyndns address my subsonic was using and told my friends that my server broke and it wouldn't come back. Sucks being the bad guy, but I can't trust somebody I don't know.
This, along with my advice to you, might sound extreme; but with 700GB+ of mp3s it's better to be safe than sorry. Odds are you won't get in trouble, and even if you do get "caught" you'll likely only get a cease-and-desist letter and have to sign a "I promise never to do this again" agreement.