The public domain works like Snow White and Cinderella were hundreds of years old when Disney made their versions, and they have no issues with others making their own versions of these fairy tales (because there is only one "Disney's Snow White").

And Disney is perfectly fine with paying for the rights to IP to adapt into films, as with Alice in Wonderland, the MCU, etc.

Actually, Disney is incredibly aggressive legally when it comes to other people trying to use Germanic fairy tales in their own works, even if it's completely independent from Disney and there's no risk of confusion.

They've been able to shut down a lot of stuff that's almost certainly legal under the law, simply because nobody is able to take on a protracted legal fight with the megacorp.

Citation needed.

In the past decade there have been more than a dozen movies based on the same Germanic fairy tales that Disney has exploited. Disney didn't sue over any of them.

Disney didn't even sue over Winnie the Pooh: Blood and Honey, and that is based on the version of Winnie the Pooh that they actually own. (The original stories and characters are now in the public domain though.)

Let's mention that these stories were in public domain for literal centuries.