If I buy the Mona Lisa, change the picture slightly, then sell copies of my portrait, do the former owners have legal recourse? The problem is, those that make movies want to control the path of their art forever. It is what makes them rich, but it is a system that is both wrong, and archaic. They made their money when they sold the rights to movie houses, DVD makers and to me. If I want to alter and re-sell, why should they get to say anything?
But what seems to be happening is that an argument over what the law actually is keeps degenerating into an attempt by people who know what it is to explain it to people who refuse to accept it. The posters say--"what's wrong with this business", and then someone tells them it's illegal, and then they respond "why, there's no damage" and someone responds "because copyright law gives the owner the right to control the content" and then people who are familiar with VHS tapes, cars, houses and books start in with hypotheticals that for the most part are not relevant to the issue, and then we argue about blacking out books, and then someone wants a cite to copyright law, and they get the cite but they refuse to read it and they sure don't understand it, and then the name calling starts. Then, we get someone fresh to the debate, and the whole thing starts all over again.
I think this is the 4th time around, but I may have missed a couple.
Jeremiah, I don't mean to be crabby at you in particular, but I think that if you read through the thread, you will see that the answer to your hypothetical has been thoroughly discussed.