You insist on alleging that somehow, by making the Steamboat Willie cartoon public domain, that this should cause trademark dilution.
No, not at all. I'm saying that it will cause the MICKEY MOUSE mark to suffer from genericide, at least with regard to certain types of goods.
OTOH, I agree that the mark would not be completely invalidated; there is ample precedent for fictional characters to be both in the public domain with regard to copyright, while also being protected trademarks. The key, however, is that the characters can only be trademarks with regard to goods that do not interfere with the public domain use of the characters in a copyright context, due to the superiority of copyright over trademark in the law. My go-to example is the character of Peter Pan, which is in the public domain in the US because the works in which he originated are in the public domain in the US. Anyone here can freely use the character in any manner of creative work; in fact a new Peter Pan movie was just released recently. However, at the same time, there are also PETER PAN trademarks for intercity bus services, and for peanut butter. That the character cannot freely be used to sell peanut butter does not prevent anyone from freely writing new books, performing the original J.M. Barrie play, making a film adaptation of the play, etc.
When Steamboat Willie enters the public domain, the same situation will occur for the Mickey Mouse character as he was in that work; he'll be freely usable, since there will no longer be any limitation on the creation of new derivative works based on Steamboat Willie. (That later changes to the character will still be protected until the works in which they originate also enter public domain is well established in, IIRC, Silverman v. CBS, which went through this already with the infamous Amos 'n Andy characters) Any trademarks that Disney has on MICKEY MOUSE which would interfere with the creation of copies of the existing work or new derivative works will cease to be valid. However, MICKEY MOUSE trademarks which are totally unrelated to creative works -- such as if Disney starts selling MICKEY MOUSE brand motor oil -- will remain perfectly valid.
Freedom to copy and distribute the work ... does not make the title character public domain, only the work itself.
There's actually no such thing as a copyright on a character. Only works can be copyrighted. If characters enjoy any copyright protection at all, it is due to being part of a copyrighted work, subject to whatever happens with that work.
This is not substantiated by any precedent where the name of something is not otherwise a general description of the trademarked item
In the US, trademarks come in five strengths: generic, descriptive, suggestive, arbitrary, and fanciful. Generic marks can never be protected, and suggestive, arbitrary, and fanciful marks usually are. Ironically, a stronger mark (fanciful are the strongest) may sometimes also cause a loss of protection, as I'll get to in a moment. Descriptive marks, come in a further two types: Merely descriptive marks, which are not protected, and descriptive marks with secondary meaning, which may be protected.
DIGITAL is a good example of a descriptive mark for digital computers; it's not generic (that would be COMPUTERS) but does merely describe the computer at hand. Anyone who makes or sells digital computers can describe their computers as being digital in nature; no one can have exclusive rights in this. However, a digital computer company that uses the DIGITAL mark in conjunction with their computers a lot -- like the much-loved Digital Equipment Corporation (also known as Digital, and as DEC), whose logo was the word "digital" may be able to show that they have built up a sufficient association with their mark and their goods in the minds of consumers that they are entitled to protection for the descriptive mark where secondary meaning is invoked.
That is, if you made a clone of a PDP-11, you could certainly advertise that your computer was digital, rather than analog, in nature. But you could not claim that your computer was a Digital computer, as in that it was made by DEC.
Similarly, when the public sees a trademark, particularly a fanciful one (fanciful marks are totally made up things, like Exxon, or Kodak), they may use the mark as the name for the good with which it is associated. This is classic genericide -- the transformation of a protected mark into a generic mark. It happens because it is fundamentally essential to trademark law that trademarks NOT identify goods themselves, but only identify that marked goods originate from a common source.
For instance, Otis used to make ELEVATOR-brand vertical conveyance devices. ELEVATOR was a protected mark, having been made up by the company, and was merely use to distinguish their vertical conveyance devices from other brands. But the public got it into their minds that a synonym for vertical conveyance device was 'elevator' regardless of who made it. And by thinking that, it was so -- the ELEVATOR mark became generic, free for all to use.
It's notably happened with ESCALATOR, TRAMPOLINE, and CELLOPHANE. Once those were all trademarks which were NOT general descriptions of the trademarked items, but customers began to treat them as being general descriptions, and the customer is always right.
The THERMOS mark is also interesting; in an attempt to split the baby, courts decided that for the fanciful THERMOS trademark, the word "thermos" had become generic (since people called vacuum bottles thermoses, rather than THERMOS being seen as a brand of vacuum bottle, which it had been) and so anyone who made or sold such bottles could call them thermoses. But they reserved "Thermos" with a capital T as a trademark for the exclusive use of the King-Seely Thermos Company.
So applying all this here, limiting ourselves to goods which are creative works, MICKEY MOUSE is a descriptive mark: It is simply the name of the character, Mickey Mouse. If it has any secondary meaning at all, associating it with the Walt Disney company, it is because the copyright on Steamboat Willie prevents third parties from making their own Mickey Mouse cartoons. But take away this copyright, and suddenly everyone is allowed to make Mickey Mouse cartoons. (And we know that this is so, due to Dastar) That the MICKEY MOUSE mark appears no longer by itself indicates the origin of the goods. The mark becomes merely descriptive at best, and cannot be protected.
"[A]ctually countered by the fact that despite the fact that the cartoon is public domain in many international jurisdictions, Disney has "retained" the trademark in those jurisdictions."
That's irrelevant. US copyright law and US trademark law control what is and isn't legal in the US. What foreign countries do has no particular bearing here. I cannot imagine why you keep bringing it up, as though it mattered even a little.
"[S]uch public domain status only dilutes the trademark when the trademark itself is too general to refer only to whatever the owner created"
Again, I've never said anything about dilution. Trademark dilution is a term of art, you're misusing it, and it's not relevant here. What this discussion is about is whether the mark is valid at all. If it would be invalidated in the way that I have described, dilution would not even occur.
In any case, the loss of the Steamboat Willie copyright would have exactly the effects that I've described. Disney knows it too, which is why they're such hardasses about the copyright term. If trademarks were sufficient protection, they would not expend so much effort to protect copyrights.