Copyright Infringement???

I have a few questions concerning copyright laws and airbrushing.
Airbrushed cartoon characters on T-shirts is very popular across the country in vaction spots and tourist destinations. Alot of thse airbrush shops paint Disney, warner brothers/looney tune charaters, spongebob, Dora, ect.
Some say it's copyright infringement to paint Mickey mouse on a shirt but others argue that as long as you are not representing it as Mickey mouse and Disney authentic merchandise, it's not.
How is this viewed in the eyes of the copyright law??
Does copyright law consider it the artist's own unique design of a cartoon mouse that looks like mickey, or does disney own the right to any and every mouse that can be considered "Mickey"? Also, if it's not a copy of an actually piece of artwork, is it copyright infringemen? (ie. from the artist mind).
Airbrush artist for years have painted custom cartoon designs using famous characters. If this is in violation, then how and why have they done so for so long and without any action taken?
Also, if anybody can give any detail, what exactly is considered off limits when it comes to something like this?? the concept or an idea of the character or reproducing an exact work of art involving the character??
Thanks alot

[msg]

You can find long memoranda on this issue on the web as well, but generally if it looks like the character and you are profting from it and selling etc, it usually violates the copyright law, technically at least.