He is now allowing derivative games because they are protected by copyright, however, his artwork is free to use with few exceptions, so there's nothing preventing you from creating new games using the same characters, which are not derivatives, as many have done: http://touhou.wikia.com/wiki/Other_Games

In books, this would be equivalent to reusing characters, their personalities or traits, but copying sections of the original works verbatim is obviously still plagiarism.