I agree. I don't expect Nintendo to do anything about the infringement going on on the site, just pointing out that it's infringing either way of copying from other arrangements or not. Perhaps my misunderstanding is merely in the site's own rules of quality, submission criteria, or whatever you want to call it.
I'd be satisfied with this middle ground, yes.
It probably won't hurt us to say that doing arrangements on this site is indeed, by the book, copyright infringement. There's no way around that. But the US Law also gives arrangers creative freedom to do these arrangements even with the laws of copyright in place, because hey, fair use.
Perhaps this is when the fourth rule I mentioned comes in best - fair use disputes can be made based on the ability of the derivative work to steal market potential off the original.
By making referential arrangements that allow random pianists to pursue their interests in VGM, we don't just allow the spread of creative information - we redirect interest, and therefore traffic, to the originals. This is done with good purpose, and it's very hard to argue that non-commercial, free-for-all arrangements will take away any glory from the original tracks, no matter how brilliant these arrangements are. There's a mutual, win-win sort of relationship - I pursue my interests and love you more, you get more attention and cash. ^^