As an actual copyright and trademark attorney, I feel this sort of discussion highlights exactly where our notions of "property" and "culture" cause confusion and tension between what the law is, what our intuition is, and what we wish the world was like. Most of us probably wish that we could easily go into our local bakery with our favorite comic or cartoon character and have it put on a birthday cake for our child or best friend. Sure, we wouldn't mind paying a bit more, if it were easy and relatively cheap. However, because the copyright maximalists have been able to frame copyright in terms of "property", this reality is increasingly difficult to achieve. Property rights are generally thought of as absolute and impenetrable, e.g. my favorite San Francisco anti-parking sign that says "Don't even *think* about parking here!"
Yet kids love culture, as we all do. And their love of copyrighted and trademarked characters helps make those characters valuable, just as the creators' inspiration and skill have. Consider if no child loved Dora the Explorer; how valuable would the copyrights and trademarks in the character actually be? Not very. Yet the love and obsession of fans do not garner any "property rights" in the character or any rights at all, according the maximalists. Even those willing to pay to use their favorite characters are often chilled from doing so because the maximalists argue they must come and beg permission from the copyright owner or face up to $150,000 in fines for their sins and indiscretions.
Does this mean the creators of the character should have no rights?
Certainly not. But it may mean that they shouldn't have absolute rights. In theory, that is what "fair use" is for, to balance out the rights of the creator with the rights of the public to enjoy that creation, especially in a private world that does not compete with the creators' business. In the case of Dora, that is the making of commercial cartoons and books, not cakes. The fact that Dora is popular on cakes comes from her popularity among her fans, not the skill of the hand that draws her or the voice that speaks her words.
Finally, all too often, we see a perspective like Tshaka's, where the argument is made that if you don't enforce your rights, you lose them.
Nothing could be further from the truth in this context, even for trademarks (i.e. the only time you lose your trademark is if it becomes generic for the class of goods you sell; no one would ever start calling cartoons "Doras" and birthday cakes aren't even in the same class of goods). What Tshaka is really worried about, it seems to me, is a loss of *control* over the use of one's creations. The idea that someone other than the creator might actually make use of the character without permission is what drives copyright maximalist authors, owners, and advocates crazy, not loss of rights or even, often, compensation.
It is this battle for control that is at the heart of the copyright wars and little else. From the perspective of consumers and fans, characters like Dora have become part of our lives and we shouldn't be ashamed or intimidated from enjoying that fact, even if it involves putting their image on a birthday cake. From the perspective of the Copyright Maximalists, however, even a "Let them eat cake" policy is far too lenient and infringing of their rights.
Update (June 17): More commentary from the Copyfight crew, Ernie Miller's post,