This is pretty much direct pixelated copy of the original photo. I think he deserved to get sued.
The derivative examples he provides below are copies of truly iconic images, while Miles Davis cover is a pretty mediocre photo by a commercial photographer.
This is a clear-cut case of fair use - it seems Maisel would likely have lost had the case gone to trial (see Blanche vs Koons).
To your second point; the original photograph on the Miles Davis cover has absolutely become an iconic piece of American culture - I take it you're not a jazz enthusiast?
Go to google images and search for "jazz" or "miles". You will not find that photo in the first 200+ images (I haven't checked further). You will see many other photos of Miles Davis though. You call that image "iconic"?
The derivative examples he provides below are copies of truly iconic images, while Miles Davis cover is a pretty mediocre photo by a commercial photographer.