Buffy vs. Edward Remix Unfairly Removed by Lionsgate

Basically it looks like YouTube is too scared of lawsuits to acknowledge any fair use rights exist at all. Either you agree with ads, or your content is getting removed, the whole appeals process may work only if the content is not actually copyrighted, but is completely useless for fair use grounds as claimant can just repeat their claim of copyright ownership (which is true) and have it deleted anyway.

I think fear has little to do with it. They put in an automatic system because of the fact that they need to deal with so many claims.

It's not that they fail to acknowledge fair use, it's that they err on the side of being restrictive in every situation because the law tells them to do so. When a DMCA takedown is filed they need to respond by removing the purportedly offending content. It's not their responsibility to mediate or investigate the claim. The number of takedown notices submitted also make that impossible.

On the other hand, laws exist to prevent people from submitting takedown notices in bad faith. Lionsgate doesn't have a claim of copyright ownership, the author has copyright. The author uses materials that were authored in a production that Lionsgate now has rights to, but the new production is a new work that uses elements that it has legal right to use.

I think that the fact that they once claimed audiovisual copyright and then dropped that when the term expired and claimed a second time for visual copyright is evidence that they are abusing the automated controls of youtube and acting in bad faith. If they weren't, they would have been justified in delivering a legal copyright notification to have the video taken down when the first appeal was filed.

Instead they dropped the claim and issued another, slightly different claim to abuse the mandated automated system.

That's absurd. Youtube provided extensive avenues of dispute and appeal. I think Lionsgate is wrong in this case (although I'm not wholly sure, because using their source material for ~30% of the video is pretty substantial in my view), but Youtube isn't there to act as a court or arbitrator. by law, it has to respect the claims of copyright holders. It is not the agent of those seeking to use copyrighted material on fair use grounds. The authors dispute is with Lionsgate, not YouTube.

So they got advertisment money based off something that was 2/3 content owned by another big media company?

Which "they" are you referring to, Lionsgate?