This question is quite similar to another one I already found here.
I would like to use an image of a very well known plumber in my upcoming research paper. Of course, I do not own any rights to that character, nor the specific JPG above. However, I plan to use a freeware pixel-art software to re-create it on my own, using my own custom (though similar) colour palette. I will never refer to this character by his original name, of course.
Am I legally allowed to do this or can I expect problems?
If the figure is copyrighted you need to ask the copyright owner for permission. You may be on the borderline of fair use in the US, but if the copyright owner objects you have to defend it (think expensive). But, they might agree to its use (the original, not a recreation) in such a case. And you would mark the use as "with permission".
Recreating a "similar" figure is no protection at all as the right to create "derived works" is one of the things protected by copyright in most jurisdictions.
A "twitchy" copyright owner might well object. Disney for example is very strict about what is allowed for their IP.
One thing that may be in your favor, though (related to fair use), is that you aren't creating a competing product and won't reduce the "value" of the image to Nintendo.
