You’re extrapolating a huge amount of shock content from just one or two examples, but no strong evidence. Sure, I’ve heard of Blood and Honey, but that’s the only nasty Pooh derivative that’s made its way to my consciousness. Comparing to other public domain properties is instructive: I also remember when Pride and Prejudice and Zombies came out, but I don’t remember any other gory Jane Austen adaptations, and Zombies is rather low‐profile compared to the more popular adaptations such as the BBC series, the 2005 film, or Bridget Jones’s Diary. Or compare to Sherlock Holmes, which despite the Doyle estate desperately holding onto every shred of copyright to the last, has had many good “unauthorized” adaptations in recent years.

And even if 90% of public domain adaptations were crap (a reasonable number for copyrighted content as well, if we believe Sturgeon†), I think a single unconstrained Mari0 (https://stabyourself.net/mari0/) is worth ten gross Mario fanfics that I’ll never see without looking for them.

† Sturgeon’s Law: “90% of everything is crap.”

> The appeal is in spoiling childhood innocence and not getting sued for it.

Unfortunately this happens under the current system. See E.g., Star Wars. I’m not super invested in the franchise but entries after the original trilogy have been polarizing, as probably the vast majority of us here have been made aware.

Copyright be damned, I have many photos of Mario that would shock, traumatize and potentially offend you. Please email me if you'd like a copy.