The truth is that his version just wasn't that different than the original iconic image. He used the image in exactly the same context, derived value from the similarity (that was the whole point), and derived revenue from the sales. So how is this okay?
I wondered the same thing. For example, what if I took his 8-bit music and painstakingly recreated by hand a 4 bit version by exactly copying the notes from his version. And what if that started appearing all over the internet and swamped the references to his own work? I think he'd be pissed off.
I feel bad for him because he did go out of his way to do the right thing on all other counts and this was an oversight - receiving a $32k punishment for a simple mistake is a tough break. However from his description he knew up front he was trading on a very fluid definition of fair use and he had to know it was a risk.