NotLD entered the public domain because of a failure to apply a copyright indication. Largely due to this oversight, and entire genre of Zombie media has flourished unencumbered by restrictive IP.
Obviously your cynical take on fan-art is despicable and ignorant, but there's no shortage of examples of what the commons can produce.
Look at game companies stopping fan made games. I remember hearing about a fan remake of PS1 Metal Gear Solid. Was gathering huge fan far and had kojima's blessing, but the studio shut it down.
https://gameranx.com/features/id/159002/article/10-incredibl...
A success story for one fan project though was Sonic Mania https://en.wikipedia.org/wiki/Sonic_Mania
I have also seen theories for movies on r/writingprompts that blow actual sequels out of the water.
But then again, this is nothing new: (nsfw) https://en.wikipedia.org/wiki/Erotic_art#/media/File:Shuvalo...
I think fan fiction is a clear example of the kind of vibrant art community that could emerge if the law got out of its way.
The right to piracy wouldn't kill art. It could cripple the art business, though, but that seems to me like a fair deal.