For myself—this is subjective—I find the relationship between Fairey’s work and his sources discomforting. Nothing substantial has been added. In my own case, when I did the Dylan poster, I acknowledged using Duchamp’s profile as an influence. I think unless you’re modifying it and making it your own, you’re on very tenuous ground. It’s a dangerous example for students, if they see that appropriating people’s work is the path to success. Simply reproducing the work of others robs you of your imagination and form-making abilities. You’re not developing the muscularity you need to invent your own ideas.

Glaser's second point about a student's reaction to this work is an interesting point. Fairey lent a perspective and an idea to his work. The fact that he was able to lift it from the source and the fact that someone can create a similar effect using Photoshop does, however, risk teaching students that they can succeed by simply creatively manipulating someone else's work.
That said, I recommend checking out the comments on the Boing Boing thread. It's an interesting discussion.