Yes, indeed, copyright is a very grey area, but still with some clear-cut policies on what is and isn't acceptable with regard to fanworks. Unfortunately, Nintendo is notorious for its takedowns, even with some of the best fan-made reboots . A recent example of such is the fan-made game Pokemon Uranium, which boasted 1,500,000 downloads and took about a decade to develop, before Nintendo got its lawyers involved. And then there was The Legend of Zelda 30-year-anniversary fan tribute remake that was similarly taken down.
One fanwork of particular note is The Legend of Zelda: Ocarina of Time 2D, an impressive reboot entirely redone with Link to the Past style sprites, even boasting an online multiplayer mode. Essentially, it's a LoZ: OOT clone, but entirely re-rendered in 2D. I think it was in May last year that Nintendo slapped a DMCA notice on it for the download. However, on the plus side for this one, apparently there's talk of a deal with Nintendo to license the IP for this and make it official.
I'm all for fan-made games. Some of them are amazing! I don't want to sound discouraging at all, but if you want to make this kind of game, even if it's free and non-commercial, you can almost certainly expect some kind of backlash.
It's probably better in the long run, therefore, to make a "variation of a theme", basing concepts on IP content rather than using it directly. For instance, Zelda could have a cat-like face and tail. I know it's way not the same, but it still wouldn't be Nintendo's Zelda. You can draw inspiration and ideas from the Zelda game(s) as well without risking the repercussions of IP problems. In today's society, it's far better to play it safer in my opinion.