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Is that easy enough to follow?
Cool story, doesnt change the fact, that effectively, as long as modders are at least the smallest bit capable, they will out-do the actual designers of the game, both in design and in quantity.
You are at best an anecdote as to some people still buying skins, but the most likely outcome will be, that people will just download the modded skins, which will almost always be superior (due to factors not worth getting into here, just look at any modable game) and not give a damn.
It threatens their bottom line. It's irrelevant that some people will still buy skins, the point is, that people shouldnt have the option to not buy skins, if they want to look different. They want you to need to spend money.
Increase the profit margin and the whole shebang.
https://dev.epicgames.com/documentation/en-us/unreal-engine/configuration-files-in-unreal-engine
but your right lots of games sell skins and allow modding, i hope they leave it in
But now? Every live-service game exists entirely to milk the whales (which sounds weird) it exists, not because someone has passion for a project and wants to deliver a cool game. The game is a vehicle for skin sales. Diablo 4 is a vehicle for skin sales. It's not an interesting game. It's an MMO-igized amalgam of mobile and live-service games that exists to push you through hours of grind, that make you feel slightly better when you buy a skin, because at least a skin looks different for a bit of time.
They are profit-machines. They exist to pump out profit. The game can be as mid as it gets, as meh as is allowed, if it features Microtransactions, it will generate profit. Maybe it's even in their interest to play towards the least smart people, because they question the design flaws of the game less, but buy more stuff. And you only maximize this profit, if there is 0 alternative to get a similar effect. Mods achieve that. So it's extremely unlikely to remain posssible, or, if it does, it will probably enter the same area as LoL does. You can mod your game, but if any automatic mechanism ever decides to ban you because of it, you are out of luck.
It's just a hard no.