Most plate cameras rely in part on the reflectiveness of the plate. You can definitely modify a plate to be mostly illegible to these cameras but easily human readable.
I think they use IR to 'light' up the plates at night, otherwise the exposure time would be too long to pickup a license plate.
Should make your car invisible to dashcams too.
I want an IR detector for my car, so I can know when I'm getting hit by one of these things. Not that it will accomplish much.
It doesn't really matter if it is legal or not for them to do, I'm pretty sure they'll do it nevertheless. I had a cop pull me over for the light over my plate being out. The cop said he couldn't see my plates when he was right behind me... at night with his headlights turned off (He turned them off while driving behind me, turning them back on right before the lights started).