I don't know if FFN removes fanfics about real people or not, but I AM aware that many (sane) fans feel that to do fanfics about real people kind of crosses the line a bit... I mean, suppose you were an obsessive fanboy or girl writing about a certain celebrity whose work you really like, do you think you'd REALLY want that celebrity to read smething like that?
The only big no-no I can think of regarding FFN is you can't write anything with really explicit and/or graphic material, which I guess isn't really strictly enforced - I've read some things on FFN that made me feel like I needed therapy after reading.
It's actually been a long time since I regularly lurked on FFN (I have been reading an updating ARTHUR story with the kids in high school, and for some reason, Arthur and Fern like each other), but it's kind of amazing some of the stuff that flies past their radar... but then again, I think I heard something within the last year or two that FFN was going to start cracking down harder on those fics that do have really explicit content in them.