He was talking about when Veigar uses one of his emotes.
http://puu.sh/bmUvO/c8caba4e3b.jpg
He turns into a pixelated version.
That's actually not quite right. Identical pixel placement copying is in fact against the rules, but this has been pixeled new from the ground up only copying the character's design. The original is an entirely different type of art so the pixel placement can't really be stolen, and since he obviously isn't claiming it as his own character he came up with, this is absolutely allowed. You will notice lots of fan art of characters from games, movies, etc all over PJ.
The character's likeness is very good. Nice work!
As the pixel placement is pretty much exactly the same as the official in game version I think this is technically against the rules unfortunately.
http://riot-web-static.s3.amazonaws.com/images/news/August_2014/FBV/FinalBossVeigarScreenshots.jpg
My mistake, I seem to have overlooked that part of the screenshot.