Square pegs on round spots: transformative alteration?

Pam Chestek points to this interesting story about a photomanipulation by Romain Eloy that won a contest based on the theme of checkerboards. 

It's based on a nice photo of a bug by Kevin Collins, but also altered; the photo was CC-licensed, but the creator of the photomanipulation didn't give credit.  CC licenses don't purport to limit fair use. So, was the photo transformative of the meaning/message of the original?

The contest sponsor deemed the result transformative enough that it considered the winning photo to be Eloy's own work.