Maybe I am reading different ToU than you do - which is possible since RIot is well known for having fckd up websites overall - but this is what "my" ToU says:
VI. CODE OF CONDUCT
J. Using any unauthorized third party programs, including but not limited to "mods," "hacks," "cheats," "scripts," "bots," "trainers," and automation programs, that interact with the Software in any way, for any purpose, including, without limitation, any unauthorized third party programs that intercept, emulate, or redirect any communication between the Software and Riot Games and any unauthorized third party programs that collect information about the Game by reading areas of memory used by the Software to store information;
It plainly says if you are interfering with game files using unsanctioned 3rd party program you are violating ToU. And Leaguecraft is "moding" your game files and "emulating" situation where you see skins that you should not have (wheter because you didn't buy them or they are not part of the "real" game).
So to me it's plain NO-GO. Unless someone can dig up some written proof of a Rioter saying it's OK, I would advise not to use that program.
Maybe I am wrong, but better safe than sorry, right?