Mate, I have been on the other line of this... I was offered a great position in Japan. I was told to get my holiday working visa (a one time thing) and get ready. One day after I had the visa in hand I was told the position was no longer available. There I was with a visa, no job, and only had 15 days to find one. This was a one shot deal, and the company "screwed" me.
If you are not sure you want to work long term (or to complete the contract) for a company you have an offer for, don't go. Not till you have all the facts, not till you are 110% sure you will fallow through with the contract. Research the school, the city it is in, ask other teachers there how it is, ext...
I have seen how bad things can get when someone backs out of a deal, and to think of a school who lost a teacher with little to no notice... I can imagine it would hurt them greatly.
Robert, I have had a friend who had their passport held from them... I wont go in to the problems it caused, but I will say what they told me. Pass it ONLY to the embassy, and officials. Under no circumstances pass it to the school (there is NO need for the school to hold a passport) a copy is more than sufficient.