I've done passport photos digitally for people for several years and always printed them on Fuji Frontier technology which satisfies all passport requirements in the U.S.
But as has been noted, U.S. passports are now "copies" of the original, but I suspect the "originals" have been saved by the passport office for replacement purposes in the event of an emergency (remember you always send two).
Inkjet doesn't necessarily mean "fades quickly" - it all depends on the technology, ink and paper. A few years ago Epson introduced several new "archival" ink/paper combinations. Some appeared to work very well indeed, and some didn't. Presently the Epson 2000 series have archival pigment inks which are rated in excess of 75 years against UV fade. Actually, several professional photographers who sell their work in major art galleries are using this technology and swear by it.
The larger problem, I think, is whether or not the image might be subjected to excessive moisture and "run" or smear. Obviously, this is a non-issue for U.S. Passports, but still may be a concern for others who wish to do their own.
As for issues of "changes to original" - I don't think that is a major concern for any country as long as the photo indeed represents a reasonable likeness to the individual. After all, for anyone in the business, it's quite easy to "modify" a negative, and nobody tells the ladies that they can't wear "makeup" or change their natural hair color when having their passport photos made.
If I remove a "zit" or cold-sore for a customer's passport photo, I have no fear of that being considered an "altered" photo any more than if I applied makeup to the subject before shooting. After all, the purpose of a passport photo is to "identify" the subject, not to "embarrass" them. Unfortunately, some of the people offering passport photo services have no business taking photos at all - and their work speaks for itself!