HouseOfAmon, are you familiar with fanfiction? It skirts similar lines that creating mods based on copyrighted content from other sources does. In fact, it is similar in a way to modding KotOR in any way is. Many copyright holders tolarate it, some encourage it, while others squash it. One way or another, we're playing in someone else's sandbox already--we don't hold copyright on our mods, except for custom content that we can claim copyright over (say, for my Dustil NPC mod I and Jiara could possibly lay claim to some of the dialogue, but that's also in a fanfic way, we could only claim it completely if if it didn't have anything to do with TSL, but there's nothing else I can copyright in it...it's a matter of courtesy to the community to not use other modder's stuff without asking, especially if it is something copyrightable like a completely custom sword built from the ground up), and if they have an iron-clad rule that no porting is allowed, then to continue playing in their sandbox, we have to follow that rule.
To address your example of releasing a mod that was so obviously based on someone else's but was not, in fact, their work...that would be a lousy thing to do to your fellow modder, but it is in an entirely different class than taking their material without doing any of your own work and claiming it as your own. The difference between writing a blatant rip-off of someone's fiction and copy/pasting the whole thing down to the typo.