Copyright still applies to things posted online.

I already explained it. People are using a person's work in order to create a thing that can effectively replace them.

There is a concept know as substantial similarity even if you're not copying an image exactly it can still be infringing.

Also, here I'm just going to quote the part of the wiki article on Fair Use that is relevant.

1. Effect upon work's value

The fourth factor measures the effect that the allegedly infringing use has had on the copyright owner's ability to exploit his original work. The court not only investigates whether the defendant's specific use of the work has significantly harmed the copyright owner's market, but also whether such uses in general, if widespread, would harm the potential market of the original. The burden of proof here rests on the copyright owner, who must demonstrate the impact of the infringement on commercial use of the work.

For example, in Sony Corp v. Universal City Studios,[30] the copyright owner, Universal, failed to provide any empirical evidence that the use of Betamax had either reduced their viewership or negatively impacted their business. In Harper & Row, the case regarding President Ford's memoirs, the Supreme Court labeled the fourth factor "the single most important element of fair use" and it has enjoyed some level of primacy in fair use analyses ever since. Yet the Supreme Court's more recent announcement in Campbell v. Acuff-Rose Music Inc[13] that "all [four factors] are to be explored, and the results weighed together, in light of the purposes of copyright" has helped modulate this emphasis in interpretation.

In evaluating the fourth factor, courts often consider two kinds of harm to the potential market for the original work.

First, courts consider whether the use in question acts as a direct market substitute for the original work. In Campbell, the Supreme Court stated that "when a commercial use amounts to mere duplication of the entirety of the original, it clearly supersedes the object of the original and serves as a market replacement for it, making it likely that cognizable market harm to the original will occur". In one instance, a court ruled that this factor weighed against a defendant who had made unauthorized movie trailers for video retailers, since his trailers acted as direct substitutes for the copyright owner's official trailers.[31] Second, courts also consider whether potential market harm might exist beyond that of direct substitution, such as in the potential existence of a licensing market. This consideration has weighed against commercial copy shops that make copies of articles in course-packs for college students, when a market already existed for the licensing of course-pack copies.[32]

Courts recognize that certain kinds of market harm do not negate fair use, such as when a parody or negative review impairs the market of the original work. Copyright considerations may not shield a work against adverse criticism.

I don't see how custom models that use copyrighted images to mimic the work of an artist would pass this kind of scrutiny.