Artie Lange and Nikki Cox, 2 of Max Wright's costars from The Norm Show - the show Wright was on after ALF - positively identified him as the person in those photos, which are actually just stills from a VHS tape the Enquirer obtained of Max Wright having sex & smoking crack with homeless male prostitutes. And it was known at that time that Wright was an addict, since he'd gotten several DUIs while employed as an actor on successful prime-time TV shows. In
this clip from Jay Mohr's podcast, Artie Lange talks about how the day of his (Artie's) first appearance on the Howard Stern Show happened to be the same day those photos came out in the National Enquirer. Howard asked him about it and showed him the photos, and Artie, who worked with the guy and saw him every day, acknowledged that it was in fact Max, and said he was surprised because Wright seemed like a normal guy. A normal guy who happened to have videotaped himself blowing a black midget.
Its been acknowledged by people who knew and worked with Max Wright that it was indeed him in those photos. Since then, its come out that during the filming of ALF, Wright was an IV cocaine user, heavy drinker, and closet homosexual who, despite being married to a woman, frequented gay prostitutes & engaged in numerous kinds of high-risk (in terms of AIDS exposure) sex.
In fact, people who worked with him have said that his mental health was severely compromised at the time of ALF's filming, and there's a famous story which has reached mythic status in some circles, in which one day, when Wright was particularly fukked up from injecting coke, after a scene during which ALF talked down to/tricked/otherwise demeaned or humiliated Wright's character on ALF, Wright physically attacked the ALF puppet, punching and hitting it with actual, non-affected malice, to the extent that the other people on set were fearful for Wright's mental health. After that, Wright was put on a several-months-long hiatus from filming, during which, supposedly, that gay sex tape was made.
So the idea of him making such a tape isn't outlandish in the least, not even remotely. But, of course, you wouldn't know that unless you'd done some research or were familiar with the story, and since you obviously aren't, I'm sure the story seems more implausible than it actually is.