There's nothing wrong with fanfiction. At best, it actually [i]encourages[/i] creativity and new ideas in fans of a series.

Like you said, fanfiction lets fans explore areas and scenarios that the original fiction didn't touch on. And while you argue that AU (Alternate Universe) stories seem to defeat the purpose of this, I think it's an even [i]more[/i] creative take on a series. AU's take characters people know and love and put them in situations that not only didn't happen in-canon, but would've [i]never been possible[/i] in-canon, exploring how those characters would behave in such situations. 

And this creative thinking doesn't stop at those writing fanfiction, either, but can sometimes extend itself to those reading it. Fanfiction sometimes opens people's eyes to something they didn't see in the in the original fiction - a new take on the present themes, a new way to interpret the characters, etc. Hell, Derpy from MLP: FiM really only exists as a character because of fanfiction! The pony originally started out as a nameless background character whose eyes were crossed due to an animation mistake. Fans, noticing this mistake, dubbed her "Derpy" in light of her expression and built a whole character around her in the form of fanart, fanfiction, etc. In response, the makers of the show developed her into a real character to match, keeping of course her cross-eyed look and the personality fans created for her. Now, thanks to fanfiction, little kids who watch the show can appreciate Derpy without knowing any of the fanfiction! 

But, even in cases where fanfiction doesn't make wheels turn in any such way, it's still... harmless, really. For those writing it and those reading it, the worst they're doing is wasting their time by, well... writing, and reading. Even if they're writing material that isn't great, or reading something that doesn't challenge them very much, there are still far worse ways to waste one's time. :hehe