Microsoft today announced that it will allow roughly 10 million Xbox Live members to play, rate and share community-created games “soon”. Microsoft expects the “open distribution” service will fuel the development of community-created games: By the end of 2008, the company expects that more than 1000 games will be available to Xbox 360 owners.

Seven such games became available today, including JellyCar, Little Gamers, The Dishwasher: Dead Samurai, TriLinea, RocketBall, ProximityHD and Culture.

Microsoft said that each submitted game has to undergo a thorough peer-review process and be evaluated for accuracy in representation and appropriateness. Community game developers will be able to beta test the process this spring and will be able to distribute their games on Xbox Live by the end of this year.