I’ll try to clear a few things up here, since intellectual property was one of my favorite subjects in law school. I’m a little rusty, but here goes:
Trademark is, at its purest form, about protecting the marketplace and the consumer. That is, the purpose of trademark law is to ensure that a company that produces a good has a unique, identifiable “mark” such that a consumer can easily identify the source of a good, i.e. who produced it. In other words, if you buy Kellogg’s Raisin Bran, you can rest assured that it was produced by the Kellogg’s company.
Lately (and by that I mean “in the last century or so”) it has become a hot property issue for companies as well, because very popular products tend to spawn imitators who produce cheap knock-off goods, and the companies that make “the good stuff” want to be sure that they stand out in the marketplace. To that end, they’ll stomp on anyone who uses their mark in an attempt to trick or confuse anyone into believing that a product produced by company B was in fact made by company A. In a nutshell, trademark is about preventing marketplace confusion.
So, when “Steamboat Willie” enters the public domain, you’ll be able to freely copy and sell your version of the cartoon, assuming you can find buyers for something that can be freely copied by anyone (this is why Penguin’s classics go for about half the cost of a modern novel). Re-edit it if you want, move stuff around, whatever strikes your fancy. You may NOT, however, use the image or name of Mickey Mouse to market your goods, because the Disney company still owns trademarks on those, which means they have the exclusive right to sell goods with Mickey’s name and image on it. So, you’ll have to be very selective with what you put on your DVD packaging.
So, you see? It’s all about marketing. Selling it, or a portion of it, or whatever you want, is perfectly legal, since it’s in the public domain and belongs to everyone. But you can’t offer it for sale in conjunction with the Mickey Mouse name or image; the right to do that belongs to Disney.