You don't necessarily need a lawyer on-hand to figure out "legally distinct". Everything that Nintendo has taken down before has blatantly used the name and existing characters in both name and likeness. Even if the core idea when they started the game was "pokemon but with guns" - which I doubt - it's still a good start in the vein of "inspired by" instead of "ripping off" and I bet Nintendo knows this otherwise Palworld would have been hit just as quickly as the mod was considering this is a company who made themselves infamous for going after youtubers making let's plays of a basic racing game. They're famously litigious so they're going to be watching Pocketpair and Palworld like vultures after their next meal but either Pocketpair are more careful than they'd like the public to believe or their idea is different enough from the get-go that Nintendo will never get anything on them.

I saw some comparisons of unrigged models from pal world overlayed with Pokemon models and they had nearly the exact same pose and proportions with some geometry tweaked. The chances of them matching up that closely by chance is practically impossible, and there were several examples. One rip off model is not enough to win a case, but if there's a lot of them I think there's a pretty good case that can be built. Gameplay and concept wise, I don't think there's a case, but with the model infringement there may be enough to show a deliberate pattern of ripping their model files.

EDIT: Found the post: https://twitter.com/covingtown/status/1749462735291859423

The silhouettes minus the the extra details are nearly identical.