I don't think he's using that as a legal argument. I think he's arguing that the criticism isn't based in law, but morality.

I’m not sure how copyright even survives if all it takes is a 5% alteration generated automatically and cheaply by computer programs.

These are sufficiently different creative works. To be clear, I remember Akilah v. Sargon, where Mr. Benjamin took clips of Akilah's videos, placed them next to each other, and won a default judgement. He didn't make anything physically new. His assembly of different video clips was enough to pass the test of fair use.

In this case, this is more about the end product itself, which is very significantly different. If they were color-swaps, I could accept it, but similar characters aren't an infringement.