Sherlock Holmes is not in the public domain in full. Most of the things we think of as 'Sherlock Holmes' are from stories still in copyright. It's why you see Elementary as a property and Sherlock as modern day. Counterintuitively they had to come up with new ideas because the existing ideas are locked up with copyright.
Couple of other issues.
"Small studios and independent artists could use the original Mickey character"
"Other manufacturers could make Mickey Mouse merchandise. This is probably the biggest direct harm to Disney, but I don't think it'll make much impact on their revenue."
The reason you've seen them make Steamboat Willie LEGO and the current "old-style" Mickey Mouse cartoons is because they're setting up a copyright argument if someone tried. They're also setting up the same arguments that Sherlock Holmes uses which is that the elements of Mickey in Steamboat Willie have been used recently and are thus still locked up by copyright. You can distribute Steamboat Willie, but can not otherwise use the property. The Sherlock Holmes case is here: https://scholar.google.com/scholar_case?case=163248743572192...
"Which is exactly what copyright was supposed to encourage."
No, copyright is an exclusive distribution right. It's a government granted monopoly to provide protection to creative works. The history of copyright is pretty interesting in an of itself and starts with the printing press in the 1500s. Long story short, though, it's always been about commercial exploitation of a creative work.
This was edited to correct some info.