I believe that nothing is illegal about the vast majority of these projects. They are using legally-obtained source material and performing legal alterations of it.

You could argue that redistribution of the material violates copyright. However, so far as I remember the distribution channels insist that this is material for license-holders only (those who have bought the original DVDs or other media). And honestly, the people interested in these projects really do already have at least one copy of Star Wars on legal media, and sometimes far more than one! I'll even take it a step further and state that with merchandising ties (toys, video games, new films) that the market of people willing to throw money at Disney (I cry) only increases when exposing people who don't have licensed media to this material.