If you allow trademarks on the characters and such, you end up in a worse position than when you started: Nobody can reproduce the original work or create any kind of derivative work without permission. This lasts in perpetuity as long as it is defended, and permission will likely never be given out of a belief that the trademark needs to be protected.

In other words, you're free to do anything you want with the Harry Potter movies, so long as you remove all instances of the name "Harry Potter" and all likenesses of Daniel Radcliffe wearing a robe?

I'm describing how trademark works. And yes, it does a lot of that.

Mind you, the trademark owner can authorize things. And I think there is even some analog of fair use for trademarks, but you should consult with a lawyer if you ever have more than an academic interest in such things.

The ability of trademarks to protect against commercial re-use of intellectual property isn't a good measure of how much they can replace copyright protection. If I write a fantastic book, trademark protection isn't going to help protect me from someone just duplicating it wholesale and changing the name.

Bad things are done in the name of copyrights (and patent protection). That doesn't invalidate the whole concept, it just means reform may be needed.

You don't need it to. Kids don't want crappy knock-offs.

Have you looked at the list of top 10 movies from last year?

Besides, it's only a knock-off if you were exposed to the original.