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I don't know if you're reading this, but you shouldn't give up so easily. It's as simple as changing the characters to your own. People have already spent a lot of money and time waiting for the next update. Investigate; maybe if you use your original characters, Microsoft will stop bothering you. Please investigate; I'm sure you'll find the solution. It's as simple as changing some backgrounds and characters. You should abandon this one and create a "new" one with "new" assets. Why a new one? That way, the next one won't be tainted.

Here is the thing about that.
The games core is about making a parody game of Minecraft, that is based around a meme with a sheep on a boat being pistoned.
The thing is, Microsoft is very trigger happy recently with anything, so even if they changed it, Microsoft would just re-visit it and DMCA it one more time, and then it will not just be the game, but also the support site and Itch.

Besides, the dev thats making it lost the team that worked on it.
Meaning they cant do anything with it because of the DMCA scared them away.