I recently got a nostalgic pet that i guess is made out of wooden pieces. I was wondering is it okay to create an overlay of it in plastic or another material as long as its still its species and nostalgic?
If you want a concrete answer, you'd have to file a ticket and ask since this is a rule question.
The rules for custom overlays are on this page though (and the general, non-custom overlay rule is here) so as long as your overlay follows those it should be okay. You could also just try uploading the overlay and see what happens - your CSC is refunded if it gets denied.