I agree with Sals.
While editing sprites for personal enjoyment might appear shallow to more genuine pixelers, not everybody working from templates has an inflated ego or holds nefarious designs on the works you have created, so it's wrong to broadbrush everybody in the edit community. There will always be hazards in putting your work out under the public eye, but there is no single solution to this problem.
There appears to be a good deal of vitriol coming from people against editing art. I've often noticed that people will argue against such activities by citing 'copyright law', often in a manner that creates a foreboding atmosphere. Sometimes people who are not aware of the forum temperament are ambushed with hostile responses, and others become so overly cautious of infringing that they can inhibit their own growth potential.
The spirit of the matter ought to be respecting the intent of the author, especially if you ever hope to see your works defended by others. The best way to gain respect is not through fear or force, but by setting an example of how you'd like to be treated. Once people are bitten by the issue, they tend to become more sympathetic, and sometimes they will discover a workable solution.
In the incident where Squidi's works were appropriated against his will, he made a valid point by noting the disparity of power between the small man and the big company in terms of having their intellectual property protected. However, it appears to me that reliance on this model of 'rights protection' as a means to defend or argue for real protection of your work is ass-backwards. It is partly because of these impersonal systems that defer to assumed government protection that digital media is increasingly being pirated and authors do not get proper credit/tribute. And since these systems rely moreso on the investment of capital, poor artists will continue to lose out. There are solutions that do not necessarily require money.
The debate is on whether or not editing others sprites should be acceptable, regardless of legality(the sprites in question are of Public Domain).
One opinion is that editing is a waste of time and cheapens pixel art.
The other is that it is a viable means of learning a style, and a good method for up and coming pixel artists.
People can and will edit other sprites regardless of legality. It happens constantly.
If you only do edits, that's the limitation you've set on yourself. To those who find a need to be the best possible pixel artist, or at least the best
you can be, then it would make sense to not restrict yourself, practice, and try new things.
It is certainly a viable means of learning style, but mostly technique.
My final answer would be this: You should have the freedom to respect or not respect anybody you want, and accept the consequences of such, good or bad. If you don't like what someone is doing, feel free to use any means necessary, as long as it's not forceful or coersive. Think proportionally. Peer pressure is effective when the issue is confined to a single forum. Boycott campaigns can have an effect when the injustice is more pronnounced or far-reaching.