I'm honestly surprised how much of an angry thread this has become. I personally have no opinion over the product in question, but the laws regarding it are clear.
1) What "Clean Films" is doing is blatantly illegal. Copyright law is very explicit in that they need permission from the movie studios to do what they are doing. Copyright law also states that the copyright holder has every right, no matter how Draconian it may seem, to say "NO" for any reason. They don't have to explain their reasoning either.
2) "Fair use" is a concept derived for non-copy protected media. The 1998 DMCA overrides any "fair use" laws regarding digital media with copy protection. Since "Clean Films" is most certainly circumventing DVD copy protection to get their source materials to edit, they are, essentially, breaking two laws in their business. Even if you ignore the issue of copy protection and the DMCA, "fair use" *ONLY* covers non-profit personal use. "Clean Films," as a business that sells and distributes to individuals, would not be, under any interpretation, covered under "fair use."
That aside, I will agree that media companies have been abusing their power, and copy protection has, essentially, eroded "fair use" without having to actually repeal the law. In time, they will want you to buy a movie or album several times over: once on DVD, once again for HD-DVD/Blu-Ray, once again for your iPod, again for your cell phone, and again for your PSP. You do have recourse, though, and that's refusing to buy it in the first place.
But, like I said, ending copy protection and repealing the DMCA will still not change the fact that what "Clean Films" is doing is blatantly illegal, even under the oldest and most liberal copyright laws. And with all of our lawmakers being technologically stupid, expect even more laws to erode your rights when media companies kick up paranoia.
(And, BTW, when TV networks have films that are "edited for time and content," they would have paid and received permission from the movie studios to do that.)
Melon