Been fiddling around a bit trying to achieve that too.
First the bad news: ~/.runicgames/Torchlight/Mods simply doesn't work. Either you leave the filenames alone and they have no effect, or you rename mod files and folders to uppercase and the game doesn't seem to understand what you're trying to do, the log shows it doesn't find the files anymore and you get sweet "missing texture" textures and other atrocities.
Then the good news: just unzip pak.zip, merge the files, zip pak.zip again, then launch the game. Tadaa! Mods active.
Then more bad news: even retexturing mods (SSSSkinsNarmor) don't fix the "missing heads". Any update will force you to unzip/merge/zip again. But oh well. At least it works.
All my tests were done on today's build, indeed.
If you don't have the pak.zip, the game doesn't run. It's there. In your installation folder. Hopefully you didn't go and stuff it in the system directories.
e.g. On my computer, the game is installed in ~/games/Torchlight - the pak.zip is here: ~/games/Torchlight/pak.zip :P
Thanks. Merged the zip, and now custom classes are showing up, with some random crashes, but it's an improvement! Oh, and missing heads now.