For all of the talk that Shepard Fairey is just a plagiarist, I think that the clearest indication that his art is above board and adding something new to the world is that until a few days ago, no one knew who had taken the photo of Obama that became the basis of the iconic Hope poster, not even Fairey or the photographer who took it.
Reuters are understandably somewhat put out on their own and Young's behalf, but like it or not, Fairey's use of the picture are well within the parameters of "fair use". His transformative use of the image - both in flipping and re-orienting it, adding jacket and tie and the "O" Obama logo, and converting it to his block print style make it consistent with all legal precedents for use.
Update: But, but ,but, not so fast. It looks like Tom Gralish has found the actual photo that Fairey used; it was taken by AP's Mannie Garcia at a National Press Club event in April 2006. (thx, ryan)