BUT my dear Watson, you miss the key ingrediants to the mix! (sorry, I'm in a real smart arse mood tonite. My apologies)
Sonic was never released on Snes... NEVER. Genenis/Mega Drive/What-have-you code is NOT compatible with the Snes. So to have a version of Sonic, modified or not, on the Snes, it would have to be a clone. Clone's aren't illegal. Hell, if they were then there'd be no Doom clones (which is a good portion of the gaming industry) or Street Fighter clones (same as above).
Therefore, in my humble opinion, it is a clone, and thus, perfectly legal.
Morien
Edit: BTW, wasn't there a new legislation that made it so copyright on a digital product is void if the copyright holders are no longer providing said good on a currently used medium? Or the medium that it was provided on is no longer popularly used.