I think your attempt at a distinction in paragraph 1 actually proves my point. Yes, GPL covers binaries, or however else the code is distributed. Just like how copyright law protects a Miles Davis picture on an album cover, a CD liner, and on a web page when it is "mostly-the-same."
People seem to like downvoting you. Anyway, I agree with you on the mostly-the-same part, and I think it's a derivative work anyway. The article's "You're just copying what was copied" is an interesting argument that I agree with but it's not really relevant to the copyright laws--again applying to a programming example, just because you bought a licensed copy doesn't mean someone can copy your copy without a license.
Do I think people should be able to make pixelized versions of photos for whatever purpose? Sure. Do I think the current law would be okay with that? No.
Those two pictures are not out of context. They are from the case that Baio cited himself. On Baio's blog (http://waxy.org/2011/06/kind_of_screwed/) he cites an "influential paper on fair use" as his reasoning and authority for his own fair use argument.
These pictures show what the paper writer is actually using as the "transformativeness" example. Baio never bothered to dig into the writer's citations to figure out the details. Trying to claim his own work is similar to the Blanch v. Koons case is a mistake. They aren't alike at all.
Do I think people should be able to make pixelized versions of photos for whatever purpose? Sure. Do I think the current law would be okay with that? No.