The case is especially interesting because no large faceless corporation was involved, it was one (very wealthy) artist going after other (not very wealthy) artists.
Is there a point at which those values of money make it acceptable to take some one else's work, alter it, and re-sell it? If Maisel had settled for $10,000 would we be having this issue? What about $1000? Nothing at all?
Litigation is unfairly tilted towards those with money. Fortunately for Jay he has some. He obviously felt that Kind of Bloop's cover unfairly used his art, so he sued. I am assuming that the settlement will cover _his_ legal costs. My wild-ass guess is that $32.5K would be about right to cover filing, and negotiating a settlement with a good NY attorney.
So, if an artist feels that their work was ripped off (whether or not that is ACTUALLY the case), and they have the means to do so, do they not have the right seek litigation against the offender?
Regardless of the merit (I believe it's fair use), Maisel was not harmed by this remixed album. Purely sending a cease and desist would have done the trick, there's no reason to try and squeeze cash out of it. That's why I think he comes out looking like a dick.
The derivative examples he provides below are copies of truly iconic images, while Miles Davis cover is a pretty mediocre photo by a commercial photographer.
To your second point; the original photograph on the Miles Davis cover has absolutely become an iconic piece of American culture - I take it you're not a jazz enthusiast?
And then go search for "morrison".
And 20th for "Miles Davis": http://images.google.com/search?hl=en&biw=1400&bih=9...
"Kind of Blue" the album is incredibly famous and respected (http://en.wikipedia.org/wiki/Kind_of_Blue#Reception_and_infl...), and its album art--though not the best I've seen--is therefore a Big Deal by association, if nothing else.