Hendrick,

That seems fair in pretty much the same sense that Eliezer's 1/N each is fair. It's just an incentive compatible way of implementing the 1/N rule.

(Also, you'd have to rule out enforceable side-deals, otherwise 1 could cut a deal with 2, such that they each get half: 1 cuts two 0 (or infitesimal) slices, leaving the entire pie for 2; in return 2 divides the whole pie with 1 (using the standard method). No, the side-deal isn't incentive compatible; that's why it needs to be enforceable. /nitpick.)