Well you may be right there in a sense. Art theft shouldn't be encouraged, but still, everyone knows that those sprites have been taken from some existing animation or game and the general public just likes it when they see or play something they can relate to like a parody on a game they played or a movie they saw. There's not much you can do about it.
The only real problem there would be that people that invest a lot of time into something original get moved back to the bottom and don't get the amount of views they deserve. That's kind of the negative effect of all the prizes being handed out nowadays. There's just a new goal to win something instead of making a cool/original game or animation. That simply leads to people trying to find the easiest road to victory.
Still this is hardly the thing that requires the most attention on the net if we consider the subject of flash art theft. All those game collection sites that earn money by publishing flashgames and movies made by others without the authors permission, sometimes even with the adds basically stripped out and replaced by their own adds are quite a serious problem if you ask me. They earn money by truely abusing the work of others (see <a href="http://www.spele.nl">www.spele.nl</a> for example).
And another problem arises. When would you know if something is actually original? There are a lot of games and animations that are based on something else or a remake of something else that only a very selective few have seen or played. Atleast the sprite movies are obvious.
Madmanonfire
I'm glad you agree with me. Trash flashes like KK are the problem, like you said. Though I never knew you were blind. How the heck do you read these and type anyway? Just amazing. What's also amazing is that you think that SKM is a horrible flash. Thank god you are a minority. I also agree with you that you and adam phillips could never amount to the prowess Alvin Earthworm has as an animator. And I also agree with you that I can't wait for flashists (if you didn't guess yet, I'm talking about sprite "racists") like yourself to die off. Then we can live in a peaceful enjoyable place called Newgrounds.