Good job on working to do something good and improving things. Doing it the way you did has resulted in the problems/questions you're asking, plus some issues worth thinking about. There's Beautiful Truth in this situation - and there's Savage Truth involved. In any case, work to make the best of it!
- Actually, "...does essentially the same thing as the one in C..." begs the question "Then why did you do it?" ("Because it was old" doesn't fly - it was working. Maybe it's a reinvented wheel to them as well as you?) Can you make it better in visible, obvious and valuable ways prior to displaying it? It'd be better if they and the users, are happy to get it.
- Remove the embedded game. Present as professional a product as you can or none at all. (But don't worry over perfection. Remember cjf's comment in this thread "...Once I get others to start testing them, well, that's a different story.")
- You'll write a lot of code in your life. Will you feel this way (pride of ownership) about each one? I hope not. It's true that you have some of yourself invested in this one since you originated the project, but you're just gonna have to get over that part. Replay: You'll write a lot of code in your life.
- It's apparantly unknown how the company will actually react;
- You wrote it on their time without their knowledge or approval - will they wonder what you didn't get done on your other duties? Companies will see both sides; the possible good of having this done, and, the possible opportunities lost while you weren't doing what you were being paid for, and the money they unknowingly invested in you doing this project.
- Have you tested it thoroughly enough that you're confident of releasing it for production or does it need a full beta? If so, can you enlist the help of the previous author as a respected ally in championing/testing the project?
- Assume you'll get nothing in return except the thanks of those who use it.
- Forget the Open Source project idea - unless they understand it. However, assume it belongs to them, not you. Their equipment and resources, their time, built for them to use solving their problems; problematic arguments when discussing ownership. If you're somehow thinking you own it, or have some reason to want to assert some ownership, see a lawyer pronto. (Personally, I'd skip the ownership thinking in this instance. And, I'm NOT A LAWYER! thank god.)
- Be humble when presenting it. Hopefully others will be lauding you over how good or helpful it is and you won't have to appear defensive or anything else.
- Don't be upset if you get nothing extra from them. Go for the personal satisfaction, the 'thank you's', the experience of having to support something you wrote ;)
- You said, "I'm having personal issues with my employer..." Don't take it personally before it's happened, and if anything happens, unless it's personal, don't take it personally. They most likely think "it's just business". This won't be the last employer/client you'll have personal issues with, and it won't be the last unappreciated work you'll ever do. Trust me on this one...
- If you get it released, put it on your resume.
And, good job on getting it done in the first place.