Under no circumstances will Subscriber use the Network or the Service to [...] (c) create a false identity or to impersonate another person
Since there are many avatars of live action fictional characters, I guess it is ok to have a celebrity as an avatar. More so if dressed as one of the fictional characters they portray.
I've also seen several avatars which are the photos of little babies. It is most likely also fine since nobody is going to be thinking that such toddler would be posting on Stack Overflow.
But I've also faced the case of an user with a photo of a non-famous person which I mistakenly thought it was her photo. Furthermore she talked in chat, pretending to be a different person than later was revealed he actually is.
I made a Google image search to make sure that such an avatar is not a niche celebrity. Should I report such a case? Does it matter if the avatar user has consent from the person depicted in the avatar photo?
Edit: I've reverted my avatar back to my old one. Looking like Glorfindel is great, but unfortunately it was causing people to get the wrong impression. I am not asking about a user taking the avatar of another user or moderator. I am asking about using the photo of another random person. Who may be a member of Stack Overflow, but most likely is not.