The counter-example that has stuck with me is the novel "The Wind Done Gone": http://en.wikipedia.org/wiki/The_Wind_Done_Gone. It's Gone with the Wind, re-imagined from a slave's point of view - and a direct criticism of the work, published for profit and without permission. The Second Circuit (probably the biggest copyright circuit, thanks to NYC) ruled that there was at least enough fair use there to overturn a preliminary injunction. http://en.wikipedia.org/wiki/Suntrust_v._Houghton_Mifflin Then the case settled.

Satire and parody are practiced by the Onion for commercial gain. Should/does that alter the protections afforded to such transformative works?

The Onion is an editorial publication, in the business of parody and satire, clearly a different category of use than a toy company creating a advertisement.

My statement was an oversimplification, but you're right, Commercial purpose would weigh against a finding of fair use in a part of the 4 factor balancing test. Does that take "a lot" of the argument away or a little? Depends on what the judge had for breakfast that day, I guess. In my head, the direct criticism of the original work is a stronger factor, but that may be based off my own fuzzy memory of the cases and pro-fair use biases. I guess I feel that criticism should be protected as not only federal common law fair use, but even more strongly as First Amendment speech - if I remember correctly that is as of yet an unanswered question in the caselaw.

ironchef makes a comment below (https://news.ycombinator.com/item?id=6798749) that being commercial doesn't matter. Otherwise, every piece of fair use on YouTube could be taken down considering YouTube is a commercial site.