I think the whole copyright issue has been the elephant in the room that in general the gaming community has chosen to ignore. It's a shame really, because I think most of us view gaming as an art and appreciate some of the artists who make the games, but at the same time we do not fully respect their rights to their creations.
I'm no expert, but here is what I understand about copyright & gaming.
1) The vast majority of games, even the earliest ones, are still covered by copyright, even most so called abandonware.
2) Laws can vary depending on where you live, but most developed countries mirror each other for the most part.
3) Many companies don't enforce it due to ignorance (don't realize their copyright is being infringed), legal costs, time & effort, the ability of the defendant to pay and the bad publicity that may come along with (i.e. Greedy Nintendo)
Without permission, it is illegal to (I'm not saying you will be sued, but theoretically could be):
Use a copyrighted character or direct game concept/desing, even if you give the game away for free
Alter a copyrighted game rom and release it, even for free
Download a copyrighted game from an unauthorized source (sorry, it's true, just not often enforced)
Without permission, it is Legal to
Use portion of a game for review or educational purposes (falls under Fair Use) The size of the portion varies and would be used on a case by case basis. Educational purposes DOES NOT give permission to hand out full games.
Use copyrighted work for parody, but this again would be on a case by case basis. Most likely if you made an epic rap video as Sonic or Mario you would be fine, but if you included the characters in your game or even made a straight up fan Movie, it most likely would not be.Grey Areas
Long Play Videos (since it shows a large portion of the game, often without a true critical review)
Making copies of a game you already own for strictly your own purposes (I would guess most likely this would be legally ok, but it would have to be based on the same game and you would need to destroy any copies you have if you no longer have the original. So if you own the 2600 version of Pac-Man, it wouldn't allow you to download the arcade version without permission)
Make a game that is similar in style to the another, but changes enough of the details (main characters, sprites, story,music ect.)
Sorry! I'm not trying to be a downer and I have no desire to report any copyright infringement that doesn't directly affect me. I'm just trying to clarify copyright and games. I also want to say I appreciate when homebrewers, like what Elktronite is doing for Boulderdash, take the time to respect the owners and get proper permission.
In the end, probably a lot of Homebrews (not all) are illegal, but most likely will not get sued.
Or if a developer stops after a ceases and decease letter, usually no other actions is taken.
I believe this happened with Stella-Sketch on the 2600.
I also found a lawyer who blogs about this kind of stuff:http://www.hanleybradylaw.com/category/fair-use/
Finally I want to give props to Weird Al! I'm a fan of his and from what I understand, even though he doesn't have to for parody purposes, he still try to get permission before her parodies someones song. What a class act!