Nintendo should not be praised for subdoing creativity. It's petty for a giant company to take down FREE passion products made to please the community. Project m is a big example that comes to mind. People love super smash bros melee but there's no doubt that melee loses its lust as time goes on (due to graphics, new characters, new stages, new innovations, etc.). So how does Nintendo repay its devoted fans that want to keep the legacy of melee going? They shut them down. It simply baffles my mind that Nintendo would want to kill off passion products like those. Their actions are legal, but that doesn't mean they aren't being disrespectful and idiotic in the process.

Compare their actions to a company like valve, where passion products like Warcraft mods are transformed into big hits like DOTA 2 and you see that Nintendo is just throwing away potential

I don't think any of these is a real problem.

1. Poor products won't get attention for long, and Nintendo could always just target the poor products instead of every single one. Fan-made products are sort of a niche thing anyway, and I bet that most people familiar with them know they're unofficial anyway. I can see some potential issues with trademarks, but I haven't really heard about that side of the argument much. I'm guessing it's not a huge problem when no one's profiting from the products.

2. Fan-made products are mainly targeted at fans anyway, and fans are probably going to prioritize official products.

3. I don't really see how this is different from #2, so nothing to add here. See my answer to #2.

I think the threats you mentioned are somewhat real, but I don't think any of them is a problem due to the benefits of fan-made products. You get bigger brand recognition for free, might attract new fans, and you end up looking cool when you have a relaxed relationship with fan-made products. On the other hand, it's not good publicity to ban these things, it can make you look anything from bad to evil.

As far as I know, Sega isn't doing too badly. Can't say whether there's any measurable benefit to allowing fan-made products because anyone's even tried to measure it, and it's probably very difficult anyway, but at the very least you gain some good publicity from it. I don't really see how this has harmed Sega. And I suppose bigger products like Total War or Yakuza could be different, but that's mainly because they're pretty huge titles and guaranteed to attract more attention. There, the drawbacks you mentioned could well be significant, but I don't see much point in discussing them because no one's ever going to create anything like that for free (and even if someone does, it's almost guaranteed to be of much lower quality).

The problem with Project M is that they basically used Brawl and modded assets including possibly hidden assets that hinted cuts and such (Mewtwo and Roy). The reason they didn't shut them down personally was probably due to the game keeping the third party characters in which that can be stingy. The dev team was pretty much shut down due to fear. You can talk about reading between the lines and such but that's what I read and we can't really say much unless the dev team say anything else otherwise since they confirmed Nintendo didn't approach them to shut down the project. 

It also didn't help that Smash 4 was looming and then later being included in tournaments. Now that Smash 4 is developing a growing scene with one of, if not the, greatest crossover rosters of all time, new players and Brawl veterans are shifting focus on Smash 4. Project M is still around and can still be downloaded through other means, it just can't be mentioned on Miiverse, live at tournament streams, or be on Twitch. Again, this is all gray line to me and you can't just simply say Nintendo hates its fans and all that stuff that goes with it. Not everyone is bothered by it nor affected by it. Maybe Nintendo, HAL, etc. will release Melee HD or something someday. For now, Smash 4 and Melee (with some 64) are the big focus in tournaments currently.

Lol, Nintendo deleted a game that had 10+ Years of development, should they be praised by that ?

They should hire those people and try to sell the game that they made.

Sorry, but this argument already fails, if parents are buying a M rated game, to kids. And it techncally was. The mod was using abandon code that was made for the game, in the first place.  

The last time i Saw, Sega had 350+ Millions of profit; the same for Nintendo.

I don't know why those people thing this way. Will EA or Activision hire developers to make "fan-made" games of Sega or Nintendo's franchises ?

A  actual game take years and years to release, that with a very large development team.  But they expect that a bunch of random people, without any $ invested, will be able to develop a game. The people from Dragon Ball Online are  taking 3-4 years only to translate the game and take the servers back, not creating anything.

If a Fan-made game is more popular or has a higher quality than a official game, there is a problem. You can notice that a game is fan-made in the first 2 seconds of gameplay. Only 0.000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000001% of that games have a quality in the level of an official one.

But GTA San Andreas had explicit sex. It was possible to make sex with Carl's Girl Friend.

My thoughts on the matter was that if Nintendo wanted a revenue share they should have got it from Youtube , not from the channels,after all it's Youtube payments that gives them revenue,they could have come up with a frame work where the producers kept their rates of payment per view or what ever the payment regime is and Nintendo had a seperate deal ,maybe cash or a certain percent of Nintendo ads put on these channels for free after all the audience is Nintendo based.

Nintendo taking down those fan games is serving their interest, not the gamers interest.

I understand that it's their right to"protect" their IPs. But them "protecting" their IPs does jack for me. So why should I praise them for taking down these fan games?

I dont get why these up and coming developers waste time with projects that:

A - They cant make money off of
B - They cant call their own
C - Its going to get taken down, and rightfully so.

- Sakaguchi created Final Fantasy do to his time with Dragon Quest 3 
- The idea of Speed being a trademark of Sonic came from Naka speed running SMB3
- Metroid was inspired by Alien

If we were not told this, would you have known that? No, because these developers took something that inspired them and made something it their own. Why cant these guys do that? Why cant these guys not use established IP's to help bloster THEIR name?