I'm not a lawyer, however to my knowledge... Yes that is illegal and a copyright issue, thats why copyright includes the word, "Likeness."
Trademark Protection for Cartoon Characters
by Tonya Gisselberg, http://www.gisselberglawfirm.com/downloads/trademark-cartoon2.pdf
The court applied the likelihood of confusion factors used by the Third Circuit,
summarized as follows:
- similarity between the marks;
- strength of the owner’s mark;
- price of the goods;
- length of time defendant has used the mark;
- intent of the defendant;
- actual confusion;
- channels of distribution;
- sales targets;
- relationship of the goods in the minds of consumers; and
- market expansion.
The court did not perform a detailed analysis of
the individual factors, but instead focused on similarity and actual confusion.
Again, not a lawyer but the Lanham Act states:
is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
Now how far reaching this applies, I'm not sure, courts have considered what actual economic impact any infringement has. This is where an actual lawyer would be better service to you.
Hope this helps you at least get some basic knowledge on the topic.