"Highly transformative"

I suspect there's a legal / technical definition of the phrase "highly transformative", used by the court that overturned the ruling preventing Google from displaying copies of images as part of search results. (BBC News)

It's a resonant phrase, though, and I wonder if it could be applied to various forms of remix -- mash-ups, fan-fiction, collages, derivative artwork.

So ... your starter for ten. Are mashups legal? Why? Why not?

Points will be added for consideration of the following:
- cover version of original
- length of sample (just one note?)
- transformation of sample (speeded up, slowed down, morphed)
- age of sample (is sampling an out-of-copyright classical recording better than sampling J-Lo?)
- type of sample (a George W Bush pontification, a TV theme tune, a Green Day track, a Dalek voice ...)

And here's some background music: 2. Axel- Control Myself After Midnight (LL Cool J & J. Lo vs Judas Priest). I know, I know: but it's fun.