Yes it is legal, because A) We do not distribute copyrighted files, B) We do not charge people to play, therefor we are not making any sort of money or profit off of the intellectual property of SOE, and C) SOE Grants, in their user agreement, a license to utilize Everquest names and art, to all accounts in good standing:
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"SOE hereby grants to each EverQuest account subscriber that is in good standing and with the grant automatically revoked as of the moment that the subscriber�s account is no longer in good standing (an "EQ Subscriber"), a limited, personal, nonexclusive, nontransferable, nonassignable and fully revocable license to use (a) the EverQuest name, and (b) trademarks and copyrighted material from EverQuest including NPC names and images, diety and monster names and images, geographical names, item names and images, character names and images, background art, and screenshots containing any of the foregoing�"
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Some say that it is not legal due to the following clause in the user agreement:
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9. You may not use any third party software to modify the Software to change Game play. You may not create, facilitate, host, link to or provide any other means through which the Game may be played by others, such as through server emulators. You may not take any action which imposes an unreasonable or disproportionately large load on our infrastructure. You may not buy, sell or auction (or host or facilitate the ability to allow others to buy, sell or auction) any Game characters, items, coin or copyrighted material.
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However, statements like these in a user agreement do not constitute legality, they merely serve as a guideline that if broken can terminate your usage of their services.