For IP mods and portrait packs, you would need to either get permission to use the art, use public domain/abandonware art, or do your own art - this hasn't changed. This ruling is in line with the previous removal of the Galatia Complete music mod for including unauthorized content, for example. 
So IP mods are generally fine, I understand that now.
The mod didn't get taken down because it modified other mods, it got taken down because it contained copyright-infringing content as in he did not have permission from the IP owners of the portrait images. I thought Alex was pretty clear on this. And same should apply to every mod then, no?
It should, but no one else was forced to remove or change their portrait mod. This is the only portrait mod that somewhat fits the game:
http://fractalsoftworks.com/forum/index.php?topic=10836.0 According to the reasoning given earlier, it should be deleted because it uses portraits from Front Mission 2. Portrait mods are basically banned now. Well, unless there's a mad man out there who is willing to draw everything or get permission from dozens of artists.