I was saddened to hear that fanedit.org has removed all of their content from the web, following a DMCA warning. Mostly sad that I didn't find out about the site sooner.
From my brief understanding of the fair use provision, a work that uses an existing work is in violation of a copyright if it 1) renders the original work obsolete, or 2) profits at the expense of the original work. Since some of these are radically altered films; no one would buy a copy of Armageddon edited into Deep Impact, for example, in the place of either film individually, and also the site was not charging.
This doesn't work with edits of films which edit out certain parts of the film to create a "good" version. And most of the films on the site fit under this category. For instance I saw a Casino w/o the Ginger storyline, for example. But a radically altered work, turning Raiders of the Lost Ark into silent-era style 10 minute serials, doesn't seem like much of a copyright violation, as it does fair use.