The logic of not allowing users to mod in their own characters makes little sense to me. If the developer didn't need to add in characters, which having done some work in Blender myself in the past, is a ton of work and then they could better spend their time on other features... like better controls, more responsive females, and better physics. Basically any potential negative to allowing modding can be countered with benefits to the developer not having to focus on those areas. A lot of successful developers do that; they make it easy to mod their game so that they can focus on the stuff they want to.
Rimworld, by Tynan, in a nutshell; he made a barebones game that is super moddable and thus he can build the stuff he wants to build and leave it to modders to make everything else, while still making huge bucks. Seems like an effective system to me.
Well I myself don't know about the developer's "work ethic" when it comes to what the source material is. My guess is that it was available for free on some site like Smutbase, or maybe Sketchfab or a similar place. If not, he might have actually paid for 3D models that are legally sold on other similar sites (except there's assets you pay for).
However, with this said, the thing about making his own characters is mostly about identifying said model (or other types of assets) to himself. Say for example he'd download a Mercy model currently freely available somewhere (and there's plenty around) and then simply imported it into Unity (the engine he's using for his game) wouldn't exactly make that Mercy model "his own".
But by modifying the model to a decent extent things start to get blurred a lot when it comes to who can claim is the owner to which assets (or which parts of the assets and under which condition was the asset originally). In his game though, his models have mesh collision detection and a lot of morphing (or de-morphing) to allow something like the throat bulging, or character scaling or breasts scaling, etc. That's not something that's available or something "automatically" done in Blender from the known freely-circulating models out there that I know of. You have to work on that stuff yourself, he probably rigged his models himself from scratch (or significantly modified existing rigs).
The gist is this: If he does work on "his" models, then indeed they start being his assets more than they were someone else's originally. Additionally, he might have actually received permission to use existing models in private but the public just doesn't know about it (he'd be in no obligation to reveal that he obtained permission unless there's some sort of doubt about the source of his work from the authorities at Patreon, or from original authors whom might see his work and realize he was 'stealing' something).
I really think that it all boils down to him having to at least work on most of his stuff to some degree, instead of him merely saving time by letting modders mod in x / y / z assets "for him". Also the problem with mods could potentially be glitches that he obviously would have no obligation in even acknowledging or fix (if entirely caused by external stuff from the mods). It'd be an extra responsibility for him to take care of a Patron coming in and asking him for help (if that ever happens I hope he thinks about adding a big sign on his first posts page that says "Don't ask me for help if you have problems with mods"; otherwise he'll spend half his days just answering questions).
Now here's the thing. I'm actually in favor of modding. I've always supported modding. But under these specific conditions I am simply saying that I totally get his position if he does actively try to "block" or limit how much his game can be modded. At least for now. I mean just look at the version number right now. It's probably not even a Pre-Alpha, it's just a 'technical test', a proof of concept that works just well enough for some people to have a quick fap and that's it. It has a lot of potential and I still defend that. But as it is this "game" needs a lot of work and right now letting mods go rampant on a game that is barebones to start with is probably not the best idea.
I do hope, however, that when his game grows, matures, gets more features then perhaps at that point he'd plain and simple give the green light on modding for everyone. He might just literally post a message somewhere (on his Patreon page I suppose) where he says something like: "Turn this game into a toaster if you want". The message being do anything with it as you please, as long as remember to just give credits where due (which most creators are fine with by the way when that is done).
I really do want to see this game flourish but right now it's barely a skeleton. Maybe he does actually want to support modding but maybe he plans on creating a tool, either separate or even integrated into the game with GUI options (Import Model, Export Model, Import Sound, Export Sound, etc). But he'd have to work on all that stuff and from what I guess he seems to be alone doing all this. If I look at his main release posts it looks like he's doing a 'new version' release about once per month. It's a decent pace of release to be honest (considering if he's alone, yeah). And he's been at this for what, a few months only? It's still very fresh and new.
Anyway, sounds like I'm defending him only but yeah, no. I want mods, but just saying that I understand his position fully.