The problem with the artist retaining copyright after upload, even if they do it for no cost, is that they can still sell it to the shop at a later date, or sell it to another player in game for credits, it all becomes very convoluted.
It would be ..."safer" all round if as soon as the avatar is accepted into the system (meaning approved, rather than uploaded, it can still be removed by the author if it hasn't been approved yet) the copyright belongs to MagicDuel. But yes, I think that some written notice on the upload page to that effect should be made.