First time I hear about this, it's interesting to have written all of this out.

Now this makes me think of game decompilation projects, which would seem to fall in the same legal area as code that would be generated by something like Malus.

Different code, same end result (binary or api).

We definitely need to know what the legal limits are and should be

Semi-related, someone made basically Malus-for-San-Andreas: https://www.youtube.com/watch?v=zBQJYMKmwAs

i think most game decompilation projects are either openly illegal or operate on "provide your own binary" and build automatic tooling around it