I agree with Daniel here, and he should know, obviously, but what the author said makes no sense. They claim to have converted the original executable to a DLL, and call only portions of the internal functions. Thus their code provides some of its own functions and acts as a wrapper to the original code. I don't see how this is possible, and the story sounds a bit like something brown found on the ground behind a bull.
I wonder if the code wasn't 32-bit passing as 16-bit, or what?
As for assets, while they may have written many of their own as replacements or whatever, it still requires the original game. That's how the replacements get around the intellectual properties laws and all. While they can be called derivatives, they require the original software to work, so the original author is not impacted, and I've heard of no suits over this.