I suspect we have a fundamentally conflicting idea of the limits of shape shifting and the scope of any modular powers, Umbralux. And I'm not sure that there is a definitive answer. It gets handled differently in different games, with different expectations of outcome. D&D handles it one way. Point-based systems like HERO or Mutants & Masterminds handle it another way. I can easily imagine taking the appearance and physical attack forms of a Giant, a Phoenix or a Pooka. But the Phoenix's fire abilities, or the Pooka's magical abilities, would be out of bounds. Even inventing one's own tentacular form with a bifurcated head born aloft on a trio of tyrannosaurus legs would only grant certain physical abilities: I wouldn't allow Incite Emotion (insanity) just because the shapeshifter saw an Outsider. Edit: But maybe in a more Outsider-themed game, the appearance *IS* the source of insanity, so it might be appropriate.
I feel the ability to create complex magical effects (Glamours, Evocation, Thaumaturgy, Sponsored Magic) are learned, taught, bestowed and/or innate properties which cannot be mimicked without that Steal Power/Mimic Power ability (which may be evidence that some things just can't be emulated - only stolen from their original possessor). With Fae, I feel that such magic is an innate part of what they are, and a Shapeshifter - however skilled - won't be able to replicate that.
Certain gross, unskilled or simple magical effects I might be able to justify as being replicable. But any shapeshifter that wants to do magic, I feel, needs to buy that magic. But I continue to interpret the line from Modular Abilities as proscriptive, and while I believe the loophole you identify was intended to give players and GMs the latitude to negotiate abilities, I don't feel it is loose enough to justify skilled magical ability.
But at the end of the day, I think of Modular Abilities as a Variable Power Pool (HERO system terminology) limited to physical effects (or simple magical creature abilities, if your table wants to go that way).