What agency "required" you to stop that process?
What I've been told previously is that the equipment mandated by the PCCD simply won't accept passport photographs, nothing has ever been mentioned to me about concerns regarding fraudulent applications.
If the Commonwealth Photo Imaging Network accepts passport photos, then there is nothing in the law preventing you from doing mail-in applications.
I encourage you to look into this, because I see nothing in the law preventing a mail-in application unless the CPIN does not accept anything other than photos taken by a camera from your location.