The only real problem with fangames is that they're a nuisance to deal with.
They really are.
First of all, you have to have knowledge of the legitimate fan games out there. If you do not, then it'll be impossible to tell if Fan Game B is a rip of Fan Game C or a continuation of Fan Game A. It blows my mind!
Which brings up the next point: a transfer in ownership. So many of these game owners quit, give out their code to a select few, and then return. It's impossible to figure out who is telling the truth.
Don't forget games using other non-BYOND game graphics. The rule states that all games using graphics without the permission of the author should be rejected. Yet, it seems like this only applies to non-fangames.
For the longest time I have avoided touching fan games in the slush pile. Lately, I have tried helping out and I utterly regret it. I do not have much knowledge of the current legitimate fan games out there. There is so much transferring of ownership, liars, rips, and so on. It just isn't worth dealing with.
If you remove fangames from the listing, you solve a lot of headache on both sides. People won't make fangames if they know that they can't be listed, and Admins won't have to worry about tracking down who ripped what. Not to mention the obvious legality issue going away.