The issue is the dev asked Valve for permission, so if they give the go ahead Nintendo has a case that valve condoned and allowed it.
If the dev used the open source tools it wouldn’t matter, they used the proprietary Nintendo tools that aren’t publicly available.
If someone were to look up images of a Japanese person, they would be very confused to find pictures of a white person. Yes they are Japanese culturally, but not physically or genetically. These are what the pageants are about, not everything needs to be inclusive of all aspects. It ruins the intents of it.