And now are spitting out big chunks of copyrighted code and presented it as somehow transformed even though all they've actually done is change a few variable names.

It's pretty likely that I've done the same thing. I mean, I've written enough CRUD functions in my life, for example, that in all likelihood I'm regurgitating stuff that's a copy, for all practical purposes, of stuff I've done before as work-for-hire for my employer. I'm not stealing intentionally or consciously, but it seems quite likely that it's happening. And that's probably true for many of you, at least that have been in the industry for a while.