Like how you mention changing files instantly leads to security threats when many games already do this! like minecraft for one lol.

But people have already been doing this "illegally" (idk why we talk like that, its not illegal to modify files, you wont go to Jail for turning a crab pink...) and its done nothing, you cant really find cheats and security threats when modifying the data files.

People are already modifying UI Code, UI Designs, Textures, Maps, Sounds, Music, Animations, Model Data its just not "accepted" by the rules. You can: Make your Minimap as big as you want, make anything resizable, change your entire face and body structure, duel weild and turn cure into Burst 2.

Serves no threat...

But the concept of modifying your own and then having it online, nah it wouldnt work really in an mmo. If you go make your skin pink and it has to inform everyone else it will be having to download data all the time. This is just not viable right now with current technologies.

Its been tested in small scale, for example in "Aion" you can make your own Guild Emblum which can be uploaded/verified and its then live on the Aion server in realtime, you can have it printed on your "Cape" and shown on the Guild Window and everyone see's it, but a simple compressed 64x64 image takes less than a second to download lol. And ofc counterstrike with its prints.