That is incorrect.
First of all, "fair use" (which is usually what is being suggested when someone says "as long as it's free") requires more than just the product being free. A free product adds to the likelihood of something being fair use, but it's insufficient. (And in fact there are many, many instances of fair use where the product is not free. "Free" is neither necessary nor sufficient for something to fall under fair use.)
Secondly, intellectual property rights extend beyond simple copyright protection in the ways that most people think of copyright.
Legally speaking, barring consent from the original creator of the work, there is no mod based on an existing property, for this game or any other, that would be considered non-infringing in the U.S. Not one, not now, not ever. At any point, any IP owner (commercial or otherwise) could lay down a world of hurt on people making Star Wars mods, Star Trek mods, EVE mods, any mod of any kind for any game and of any size, if it's based on someone else's work. It's irresponsible to suggest otherwise. Now it may be entirely true that no one will ever come after someone for making an EVE mod, but OP's question was about "legal and copyright" - whether it is legal and not a breach of copyright law to create such a mod.
And the answer, always, is "no."