You just implicated yourself, and in a public forum no less. Alone this wouldn't be enough for legal action, but it could prove very useful, especially for showing intent for criminal prosecution. In any event, you never know how information can be used, and used against you.
Yes. It happens more than you think.
I think that I agree with their argument. Even if you play full Michael Jackson songs in your commercially successful documentary, I think this still could reasonably be construed as fair use. Maybe it would be a bit better if the clips were only 15-30 seconds, but the songs are relevant to the topic, and calling it a "documentary" is accurate and non arbitrary in this case.
If you were making an action film and you used my entire song for a 3 minute long car chase, and you made $500,000,000 in the movie, maybe you should pay me a small fee in my opinion as a nice gesture.
But to answer your ultimate question, I am very, very ardent pirate and I believe that literally nothing should be copyrighted.
I do not want to be sued by Disney and I do not want to sue Disney. If one of us profits immensely, it would be helpful to share the spoils, otherwise one might generally think of you as "a dick".
But the MJ side lawyers just want money, not to protect the integrity of his artwork.
As an avid Pirate, I don't care if Disney made digital copies of Michael Jackson's music for use in a commercially successful documentary about Michael Jackson's life.