My number 1 rule when it comes to side projects is to never create something closely related to my employer's business.
As an employee, if you put a lot of your business and technical knowledge (that was acquired while on the job) on a large side project effort without your employer's consent, you're playing with fire, because you may be transferring business advantage from your employer to the outside world, including the competition. You put yourself in a position where you could even get sued if things go badly (specially if your project is a potential money maker)... See the case of the Nginx author, who just got himself into similar trouble...
In conclusion, I think your safest bet is to, as everyone is saying, talk to a lawyer... not to threaten the company, but to protect yourself and hopefully come to a friendly agreement at the end!
