Perhaps what you need is the newly developed "project module" which allows either the students or the teacher to create a list of topics, and as a second step for the students singly or in groups to select the one that they want to do. The next step is for them to submit their work to the project module site, with an optional next step of publishing the work for others to see.
More info and the current download are available at:
http://moodle.org/mod/data/view.php?d=13&rid=107
Assignment
two feature requests for the assignments module
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