It's more that rather than address mods individually, they just made a blanket statement to not use mods.

However, given that there are streamers out there that do use Mods and aren't getting into any trouble for it, it's safe to say they're not going out of their way to ban people for using them.
They will however ban people who are toxic asshats, people who'll scream at someone because they're measuring their DPS and they're not pulling off the most optimal DPS that someone of their Job could...

Altering the character models, seems to be generally also passable, as there's very little they could non-invasively do to find out who has them... "Just don't post pictures of your nude mods onto the public." seems to be the general stance.