I'm not a lawyer, but from what I understand, reverse engineering is actually not illegal ... redistributing Stardock's source code (or the binary .EXE) without permission would be. I'm guessing the usual way its done (as in the case of The Elder Scrolls mods which rely on a modified .EXE) is to simply distribute a program that does not include any part of the original .exe itself, but is programmed to modify the binary (.EXE) in a specific way to insert the new (original code, made by the modder, not including any code from the original developer or publisher) code modification. Laws regarding computer code law have become ridiculously complicated, but that's the general principle -- which also applies to hardware designs (modding a car or a mobile phone, for instance).
There would likely be complications of Steam not liking a modified .EXE. The specifics of how, and the pitfalls to avoid especially in terms of the game being bound to Steam are unfortunately beyond my knowledge.