Yes, but isn't that because the edge of public domain is very far back? Some random character from the early 1900s that no one today recognizes is not going to be all that useful. Move that edge to be just 20 years back, and it picks up a lot of things that are still well known.

20 years is not nearly as long as it sounds. Harry Potter, for instance, is already 17 years old. I bet a lot of advertisers 3 years from now would jump on the chance to use Harry Potter characters.

There are plenty of classic, well-known characters in the public domain. Sherlock obviously being one, given the context of the discussion. Frankenstein. Robin Hood. King Arthur. Jesus....

On another note, it doesn't affect your point all that much, but while Harry Potter the character would go into the public domain in 2017, the first movie wouldn't go into the public domain until 2021. In that interval, you could use the characters but you couldn't replicate their likenesses from the movies without some sort of agreement.