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Most of the fanfic writers I know (At least in the fandom-centric circle for which I write) are also careful to post disclaimers with their fanfiction, that they are making no money off of the stories, and that the characters are the property of the respective creators. But I agree with Worldwalker that it isn't legality that is the issue here, but the quality of fanfiction. For me, my opinion is that you're going to find bad fiction anywhere, fan-related or not. I don't see that fanfiction is any different, and there are some truly fabulous stories out there that perhaps aren't getting the recognition they deserve because people are too turned off by the bad stuff to keep looking for the good.
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