Yep, that's the gist of things.
Converting anything from the original game (in other words, taking the original content and altering it to create something you place in your game) is just flat-out illegal. Can't be done no matter what without explicit permission (which is virtually imposssible to get due to publishing restrictions).
In terms of intellectual property and copyrights, most defining elements of a copyright work shouldn't be used without explicit permission. This includes the name of the copyrighted work (which is probably trademarked), character names, location names (like planets), and any coined term. Anyone can have a beam sword, but lightsabers are Star Wars property. (Lucas even filed a lawsuit on a surgical equipment company who developed a laser knife and referred to it as a "lightsaber".)
Guns, health kits, ammo, etc. are real difficult to press charges for. A shotgun is a shotgun, as Todd put it to me a few years back. Note that with that lightsaber example, however, that some things are copyrightable. Thankfully, 90% of Generations is either simple weapons (shotguns, chainguns, machineguns), concepts that are real-world ideas or in other media (railguns and nailguns), or already present in Q3 (Plasma rifles, a BFG).
However, for a project like Gen, there's still some give and take. Our weapons do highly resemble media from id games, most notably in our Strogg weaponry. We were also concerned with elements like the "BFG10K" which are usually considered "id weapons". In every case like this, we emailed Todd Hollenshead, detailing our intentions, the process we were using, and including screenshots of the media we had questions about. In each case, we were informed that we would be fine.
In the case of Reborn, recreating characters is a no-go. The characters (including their likenesses) are copyrighted pretty stiffly. To use the "Dune" universe as an example, you could put a sandworm in a mod, but putting House Harkonen soldiers in your game would be troublesome.
It's all in what company owns the copyrights you wish to build a base from, and what they allow. With id, character likenesses are a significant line, and we've avoided that through the characters' presence in Q3 before we even started. THAT alone is the reason why we'll never create Generations for another game... unless this circumstance happens again.
Hope that helps.
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