Well sure, they may have a legal right to pull this kind of stuff, but let's put legalities aside for a moment. What they are doing is morally wrong; no question about it, as the only arguments against these acts being immoral require copyright laws to exist (thus not putting legalities aside). They seem to think that if something is legal, it is completely ethical to do it- but that's not the case, as indicated by history. For example, everything Gandhi did was illegal; yet everything Mussolini did was completely lawful. Nintendo has already been receiving gargantuan amounts of backlash from fans for these types of actions, and they are getting media coverage practically depicting them as cold-blooded savages who hate their fans (which is becoming increasingly spot-on). Nintendo claims their reasoning is that fan art is "damaging to their brand," but quite honestly, I'd have to say destroying people's hard work done entirely to show love and appreciation towards their characters and games for personal gain is a lot more damaging to their brand than someone drawing Pikachu with boobies, considering the former was a direct action of Nintendo while the latter was an isolated act from a completely unrelated entity with no connection to Nintendo.

And that info you have about Nintendo of Europe is actually interesting... I live in the United States, and most of the coverage of Nintendo here is about Nintendo of America or Nintendo of Japan. So, you say they don't have a Nintendo Creator's Program? That's also very interesting.