Reddit mentions of Fair Use: The Story of the Letter U and the Numeral 2

The statue of liberty is in the public domain. Anyone can use it for whatever they want. Want to take a picture of the statute of liberty and and put it on a t-shirt and then sell it? Nobody can stop you. Therefore, the image of the statue itself can be taken out of the discussion.

The torso component of the composite is taken from the image provided by the TSA to show the level of detail available in the typical scan. This is where the "commentary and criticism" comes into play.

The two remaining components - (the shins, and the raised arm) are so removed from the source as to be completely unrecognizable, and thus considered a new work. You literally will never be able to identify the original sources - therefore, there is no infringement. These components can be taken out of the discussion as well. As an exercise - try to to locate the source images.

By combining all of these components together, I have created a discrete work, protected by copyright. Consider Peter Max's famous Statue of Liberty painting which you will note is protected by copyright. If that's not convincing, you should look into the works of Rauschenberg and Warhol.

As an artist, I understand the concept of Fair Use better than most, and believe this image falls squarely within its purview, and I'm sure a court would agree.

If you are even remotely interested in the concept, you should really check out this book. It's a really entertaining book documenting how a band (Negativland) was sued by Island Records for copyright and trademark infringement. It also documents the massively important Campbell v. Acuff-Rose Music sampling case.

Edit: added info about Negativland's book.