From the article:

That said, it's worth pointing out that, while a fully free version was in the books, Bully Online had a paid early access release that may have drawn scrutiny from the IP holder's lawyers.

This wasn't like the GTA online mods. You couldn't host your own server and had to pay for access to theirs. They never said rockstar forced them to take it down either from what I have seen, it might be they just decided they weren't making enough money.

The article clearly states that the mod only allowed paying users to actually play multiplayer. So the mod devs were clearly looking to make some money off of it.

You can only sell mods in their authorized mod stores. I don't know if Rockstar has one.

That Mario Sunshine total conversion should have been its own thing.

Take Rollin' Rascal; it's an indie game that plays almost exactly like Sonic and you even have a ball form. But everything is legally distinct, and it's a super fun game. There's a mechanic for "taking over" different robot enemies so you can use their powers on others or the environment to unlock secrets and shortcuts. The company that's making it previously worked on (I think) a couple Sonic games, and I believe they're working on a port of Mother 3 as well.

Edit: there's a demo that they keep updating with cool new features, and there's a multiplayer mode with races and different tracks. You can also customize your "rascal" with different colors and outfits. All free and incredibly fun.

Back at ya