Moreover, if the person doing a fan mod doesn’t make any money off it, they’re in the clear. If I had any skill in art/programming I’d do it myself.
This is a very common misconception, and its dangerous advice to follow. Just because something is fan-made or non-profit does not mean it is exempt from copyright law or the penalties that can follow (
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). There are countless examples of fan mods using copyrighted characters or stories that were hit with Cease and Desists, even if the assets were entirely made by the modders themselves. Most large modding projects that touch on copyrighted works, like Skywind or Black Mesa, exist because of an explicit or implied licensing agreement with the copyright holder, and most smaller ones are still around only because they're too small or niche to attract attention. Fair Use is a legal doctrine, not a magic shield, and its application is subject to a judge's interpretation of the relevant statutes and case law. Unless you're a lawyer or you have one on retainer, I recommend staying as far away from it as possible.
Honestly, if someone has the technical chops to recreate Milfy City they should just do a cheap knockoff instead. The story is derivative as hell, the characters are all morphs of commercially-available models, and the game engine is free to use. Call it "MILFtown, USA", about a nameless generic midget MC and his sexual misadventures with his "landlady" Glinda, his "roommates" Coraline and Clara, and the various teachers/classmates/transients he runs across. Morph the same models slightly differently, use the same off-the-shelf environments rendered at different angles and settings, and hire some hack romance novelist to write a lame plot to string it all together. Voila, new IP.
