No, the biggest issue would be console support, which is effectively impossible. To get content onto a console, Sony has to vet the mods that they won't break the console's sandbox. For most cosmetic style things, the way SE has partitioned the data to begin with would support only a single mod ever being installed without clustering up all the mods for the game as if it were a full DLC package. To which then they are frozen and can't ever be changed again. At least not without downloading the entire set as one file again.
At best, Changing the textures of content would be viable if they can be produced in PS4(HD)/PS4Pro(4K) and PC "SD/HD/4K" versions. Changing the models, would likely require SE reserving a set of indexes in the data files for user-installable content, and it's just not likely to ever be a thing. If you look at the Skyrim mods, the most popular mods are just blatant cheat packages, followed by AI changes. Those are things that can't even be considered in FFXIV.
I doubt there is much, or any, interest in mods to FFXIV that aren't straight up texture adjustments. But if you change an existing texture, it affects everything with that texture, and if you just want YOU to have it, then clearly this isn't the way forward.
Hence, the possibility of SE maybe reserving a set of indexes in the data files for "user-installed replacement", which would mark characters who have a "user installed" modification as needing to get consent to update. This would then allow players with SE-permitted mods to review what the other player has and turn the same mod on, only for that character or leave it off. Then on the client-end, any time that character is encountered, it will use the user-installed index and not the normal index. This would require additional overhead, but not likely any more than spawning/despawning already does. For players who want to install a mod themselves, they could select it from a separate page in the mog shop, and it just enables the ability to use it on themselves.
There is a lot of work required for certain things however. To replace a gear part, requires making the same gear change to every model (so each race and gender), and to replace the entire set requires the helm, body, gauntlet, legs and foot slots for everything. So I don't imagine there being that many attempts to "make a better version of X gear".
Another way to deal with model changes to player characters would be to leverage the glamour plate system, and have a third source of items, those that SE has approved. This again would require setting aside indexes in the data files, but this could instead be treated as additional gear, rather than replacements for existing gear.