If this happens, it's going to be a new low point in terms of the band's decisions.
I think the difference between an action figure and a digital avatar lies in the potential for ease of likeness misuse on a large scale to a larger audience. Sure, someone can pose an action figure or place a funko pop in a tasteless way, but an avatar in Fortnite has animations, accessories (weapons, tools, etc.), and freedom of player expression right from the get go. In addition to easy access to record clips on PC/consoles, there is much less effort needed to share something in bad taste to a playerbase/fanbase of millions.
This isn't something new though. Activision was sued by Courtney when an avatar of Kurt Cobain was able to be used in Guitar Hero to play non-Nirvana tracks. With something like Fortnite which is basically Ready Player One in terms of pop culture saturation, you can have Chester doing all kinds of silly (at best) things. Maybe they would restrict his likeness in some way.
If this release, will this be some great catastrophe that I will despair over? Nah. It's their band and Talinda and Chester's estate will do what they see fit with his image, but I will think it's lame as hell and will make me question the band's motivations. Especially with Mike being on record dismissing a Chester live hologram. Not totally the same thing but I think it's fair to say it's at least in a similar realm.