(No, I'm not making them. Just curious)
Is it Illegal?
Will I be sued by the company (or by fan artists), because I used their character/art (fan art or official art) without permission?
It's certainly not legal, if you sell them, or distribute them in any way. If you just make it for yourself or to give as a birthday gift to that dude you think wouldn't have ratted on you, it's fine.
It's still illegal and if the owner of the copyright or trademark decided that they want to sue you, they can. So don't sell them if you decide to make them one day. There's still a big chance they won't care, but just so you know, if they want to sue you, they can.
Fair Use allowance is strictly for education purposes or something that improves humanity or its culture. Fan art hardly improves humanity unless you have a way to make a 2D picture holographic that projects a real 3D image into thin air. In that case, you're still breaking copyright but it's permissible because you've made something awesome.
Fair Use is not an out of jail card. Just because you make something for yourself doesn't make it Fair Use. If you sell it or distribute it, it's outright illegal. However, if you are not offending the owners, they won't care.
That being said, manga fan translation (since we're talking about Fair Use) is not Fair Use. It is derivative work which infringes the original owner's copyright. The only reason it's still not being hunted down is because the copyright owners have no interest in enforcing their rights (probably because it's expensive to crack down on everything).
If you translate for your own use, there is no problem, but when you share it, it becomes illegal. I suppose you can stretch the definition of Fair Use to say that you're providing a service to teach Japanese, Chinese of Korean to non-speakers. However, that doesn't fly with what we have. For you to use this justification, you need to have the original dialogues untouched, with the English translation written beside the original language page, or for each page to have twin pages of original language and English translation.
As for the answer to will you get sued for making something for your own use? The answer is very unlikely. If they don't know what you did, you won't get sued. If they still find out somehow but you're only making it for yourself, it's quite unlikely they'd care either unless you somehow offended them.
