I'm not going to pretend I know anything about legal technicalities, but you would think that Nintendo would have tried to launch C&D's against everything to do with modding or IPs if they really wanted to already. I mean BrawlVault, brawlcustommusic, and even stuff like the Melee/sm4sh hacks and Super Smash Flash haven't been taken down. There will always be a risk with modding if the IP holders aren't explicitly supportive of it, and I'm sure people will continue to make new custom stuff knowing that anyway, especially if they never cared about PM or legal ramifications in the first place.
It just sucks that we won't know how dangerous that risk can be until Nintendo declares what its intentions are or already acts on them. We could speculate on possible recent events that may affect that, but in the end it will still be speculation. So I can only recommend to keep yourself informed of the situation - see what Nintendo does, see what modders do, etc. In the end you'll have to make a decision based on your values, and I know that sucks when you have both people that support the work you create and the actions you may take to keep your community safe. Just know that what you decide isn't permanent - you could continue until you find something more fun or less risky to do as a hobby, or maybe wait until things settle down before picking it back up..
