Yes it involves Tabuu.
This quote from SWF tells all.
I fixed Gray Fox's shield. It's now usable!!
This comes at a price of having to rebiuld the .pac though.
You MUST use a fresh, unedited character.pac
I used Dantarion's Tabuu program to fix it.
Here's how I did it.
1. Open Tabuu and open your base character.pac.
2. Right Click the the name of the character.pac/MiscData[0]
3. Load the original character model
4. Open your edited model in Brawlbox and go to the ThrowN bone of the edited model
5. Go to the directory :Sections/Data/Misc/Boneref like in this screen

Uploaded with
ImageShack.us6. Select Throw N and change the number of the index to your edited model
THE NUMBER IS IN DECIMAL, NOT HEX.
7. Right Click the reference you edited and select open hex view
8. Change the Integer value in the box labeled "as int." to your new ThrowN value.
9. close the hex view.
10. Right click the file name/Miscdata[0] then click save
11. This will give off a warning. Save anyway. It will encounter a problem and need to close afterward, but the change will be saved.
12. You are done. Just make a backup of this file with the modded ThrowN for later and rebuild your character.

Edit: This also seems to correct the location of the opponent when you get footstooled so no more polygon stretching. Cool.