First of all, let me thank you for taking your time to write this in-depth explanation. It is clear to me now -after your explanation and that of others in the noticeboard- that as the US Copyright Office indicates, there is no mathematical rule for the amount of material one quotes. Also, as pointed out by you -and the copyright office- it is not very clear as what counts for a violation and what not in the first look and the matter is judgmental in nature. Therefore, one would be "better safe than sorry" to just avoid direct quotes as much as possible. "Stay out of trouble" as they say. )