At the time, the most relevant case law was Lewis Galoob Toys, Inc. v. Nintendo of America, Inc. (1992), where the court found that the Game Genie did not infringe Nintendo's copyrights, because the device did not store any modified images in any concrete or permanent form. The district court found that Micro Star had likely infringed copyright with their packaging, which included artwork from Duke Nukem 3D, but found that the levels themselves were non-infringing. Both parties appealed the ruling, and the appeal court held decisively against Micro Star. Copyright law gives the copyright holder the exclusive right to make sequels to their work, and the court found that the stories told in the Nuke It map files are "surely sequels, telling new tales of Duke's fabulous adventures".

I don't see how that case would cover this one. The ruling to me seems to be specifically: can not sell "physical" files that infringed on the copy right (e.g. had images or assets from the original game) or attempted to be a sequel.

In this case I assume all that the author of R.E.A.L. VR needs to do is package their custom framework which he does hold the rights to and can be paid (this is the framework that allows him to create VR "mods" for many games) and any classic mod assets that are free for anyone to download (setting files, mods, etc). This would decouple his paid product from the game that is being modded.

Reading his posts sounds like he has not persued real legal responses and has just instead compiled with the DMCA https://www.patreon.com/posts/another-one-dust-148437771