its a modification of game files that can potantially be used for cheating - why use recources (that are needed somewhere else right now) to check what files were changed and rule "oh yeah thats ok" vs "he changed the ore model so it gets seen from 2km away". rather define that the practice at whole is against the tos so people dont abuse it, im fine with that.
and if im not mistaken some skin tones changed/are much brighter - and the tauren size changed a bit/made them bigger with the new models - so nitpickingly said one could argue you have an advantage because you see some models easier.
use such things at you own risk, and don't act surprised if an automated warden banwave in the future hits you.
There are certain files that raise the ban hammer. None of which are the ones I am talking about.
Start Off
Now before we start off this post is not meant to create a false sense security or a sense of panic. This post it meant to stop all the Questions about "Is model editing Bannable".
[Types of Model Edits]
Every model edit is pretty much split up into 2 categories Models(.m2) and Skins(.blp) If a mod has both of them consider it to be a Model as the model if the greater of the evil.
[Skins]
Skins do not affect game play, so it shouldn't be a problem. However, the way they must be implemented to be used is on the edge. Originally, files could be just dropped into the data folder and it would work, but like always... there are people who have to do bad things to games.
Due to this exploitation, Blizzard made a few changes to help prevent simple model changes to bypass barriers. After patch 2.0 and beyond all MPQ files had to be named patch-_.mpq to work. And after Patch 2.3 An External Program had to be use to allow these patches.
Is skins bannable? No one knows for sure, but some have been daring enough to ask GMs directly. In fact a person has talked to a GM in game confirming that it isn't against the rules. As you can see from this screen shot he took, as long as no one else can see your alterations (as in it doesn't affects other players - such as an exploit) it's ok. However, you can still argue that they're just a GM, who knows if they really know what the company position is on this matter.
No one so far had been officially banned or mentioned that they were banned for using skins, but still some people are concerned of the thought. All I can say is, you at your own risk. But, skins have been out for a while.
[Models]
As for models... it's a bit more stricter in policy than skins. Due to Blizzard's short sightedness on fence and gate collisions built into only the model itself and exploiters... model switching has caused modding to take a few steps back. Why? because exploiters switch the gate models to a box or some other small object.
Using model switches or skins to give yourself an edge or to exploit/bypass things is strictly prohibited! That means no skins that let you see your enemies from great distances, stealth, invisibility, etc (like having them all bright pink or something) herbs brightly colored for easy spotting, changing the size of nodes to be able to mine from greater distances, modifying walls or fence models to bypass them, etc. If it gives you an advantage in anyway it's against the ToS.
If it's just a visual change (just for looks), as much as it may irritate Blizzard they aren't gonna pay much attention to it Because it does not exploit the game or other players.
[Wrap Up]
Blizzard's main focus is to stop hackers and exploiters. If you don't intend on using skins and models to exploit or hack you shouldn't have to worry about getting banned. That being said there are edits that will get you banned.
IF YOU EDIT ANY OF THE FOLLOWING FILES YOU WILL GET BANNED
WorldMapsHellfireRampartHellfireRampart_28_34.adt
WorldMapsPVPZone04PVPZone04_30_29.adt
DBFilesClientCreatureModelData.dbc
WorldMapsPVPZone04PVPZone04_29_30.adt
WorldMapsPVPZone01PVPZone01_32_29.adt
WorldGENERICPassiveDoodadsValentinesDayValentineBasket_01.m2
WorldExpansion02DoodadsStormpeaksIceShardsFrostGiantIceShard04.M2
WorldAZEROTHELWYNNPASSIVEDOODADSCampfireElwynnCampfire.m2
WorldMapsPVPZone01PVPZone01_32_30.adt
worldmapsstratholmestratholme_38_25.adt
worldmapsstratholmestratholme_38_24.adt
WorldMapsKalimdorKalimdor_29_9.adt
worldgooberg_fishingbobber.blp
WorldGenericHumanPassive DoodadsBeerKegsBeerKeg01_NoCollide.M2
WorldGenericPASSIVEDOODADSDuelingFlagDuelingFlag.m2