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I presume they define "First Time Internet rights" at some point, and you are happy with that definition. It could be argued that their second sentence refers only to work submitted after the point that they "further burden ourselves with the production of literary brilliance" (in fact, I think that is the only viable interpretation), and that any work submitted before then would not be applicable. On the other hand, why have that clause there when it doesn't apply to any work at the particular time time - which would argue that they are trying to retain the right. It is definitely something that should be struck from the agreement.
I would also be unhappy with having such a cynical (or maybe it's their version of humour*) statement as this "further burden ourselves with the production of literary brilliance" in any formal contract. If it's formal, stay formal, and keep that sort of stuff out of it.
* Attempts at humour such as this one often remind me of the Simsons Barbershop Quartet episode: "we need a name that's witty at first, but that seems less funny each time you hear it."
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