Are you going to tell me how this is fair use or keep being wrong about this other thing too? Parodies are fair use, thats totally different than creating a knockoff, which absolutely is open to copyright infringement prosecution if its close enough to source material, even if no copyrighted material is directly used. Don't know how else I can tell you you're wrong about this, but its not the main argument.
And ok I see your edit, and nope, thats the problem. Its not transformative just because it plays like another game. The characters are copyrighted. They have not been transformed. Chawrmandur might get away with it, not literally Charmander. (and even then, the likeness of the character would have to be transformed as well) Do you see how the knockoff thing applies now? And NO, again, you don't have to directly use their assets to be committing copyright infringement. Making your own model of Charmander does not mean its now yours to use. Your idea that the only time its copyright infringement is when they straight up steal assets is wrong, and the entire premise of your argument. I don't know what else to say after this.
Pokemon Prism would not be safe in court, nor would this mod. You can't use other peoples properties without permission, its pretty simple...unlessssss: [insert fair use here, which is personal noncommercial use, educational use, direct quote, references to material, criticisms, parodies, etc.]