"Rastifan" said ...What are you basing this on? I'm not a law student or anything, but parody and satire are forms of free speech whether you profit from it or not. In the US, the First Amendment would protect anyone making such a work, and I think that similar rules apply to most western countries. There are tons of porn movies that parody big Hollywood releases like This Ain't Avatar XXX, This Ain't Star Trek XXX. A voluntary donation system is to my knowledge never an issue. If people choose to donate money to you without expecting any sort of service in return, there is no inherent problem. People can send money to anyone if they want to, and unless you are explicitly providing goods or services in exchange, you are not profiting of off works from third parties like Capcom, Konami or Valve. I could donate to you because I think you're a nice guy. You're getting money from me but not by selling me copyrighted works. I could attach a note to the transaction with a suggestion as to what you might do for your next project, but that doesn't necessarily mean you're actually going to follow up on that. That said, I am no law student, I'm a programmer who keeps up to date on the latest copyright scandals and has some past involvement with the local Pirate Party. Disclaimer: The advice in this post is not necessarily correct. Should you suffer any damages (physical, financial or otherwise) by taking the advice into consideration, the author of this post will not be held responsible for said damages. If you were offended by the content of this post, please go sodomize yourself with retractable batons.
According to standard copyright laws recognized by most countries, we are strictly not allowed to use any game characters in porn or otherwise.
"Ganonmaster" said ...Something Capcom Europa wrote once. Free fan art are not as such considered a violation of the copyright, even if the word of it allows for companies to enforce it. They use their common sense and this goes under the reasonable use policy which is a spoken law and not a established one so far as I could understand it. But I really don't know.
What are you basing this on?