I'm gonna admit straight out that I've neither read nor written all that much fanfiction, but I give it a glance every now and then.
The one attempt at ff i wrote was based on an MMO universe, so we're talking OC. And that, I feel, is an important distinction. It's all too easy to get bogged down with a flat 'No OCs in fanfiction' statement, but it doesn't take into account the different areas that can theoretically be exploited with writing in someone else's canon.
Essentially, if you're writing fanfiction about a TV series set in, say, the real world, OCs have to be carefully worked so that they don't clash or draw hate. It's classic MS territory - as with Harry Potter fics set while he's at the school, and all the other things like that.
However, fanfiction is still fanfiction if you're writing in someone else's universe - whether you're setting it there and then or not. So, if I wrote a Harry Potter fanfic (for a bland example everyone will know), but it was set, say, a hundred years ago, and the only links were the Universe rules and locations, OCs would be more-or-less expected, and could be pulled off easily. Though, arguably, anyone going to such lengths should probably just switch to original work. That's actually what happened with my ff attempt. Oh well. It was only about a game.
Obviously, I'm clearly not talking about a particularly sizeable portion of fanfiction here, but it's still something I would read, and write too, if I had the patience with limitations. Maybe as an exercise.
I guess what I'm trying to say is that there is fanfiction and fanfiction. I'm less a fan of random pairings and the dreaded self-inserts, and more interested in seeing what someone makes of another author's world. Needless to say, I'm a fantasy author myself...