It is perfectly fine to use quotes, and reference other's articles and works when properly sourced, however if quotes and references comprise the majority of your article, then it can not be considered originally created by you.
I think it has a value - just like link posts on Reddit or sites like Google News have a value.
At the other hand, one may read an article out there and rewrite the gist of it in own words on Steem, with or without a reference to the original source. It will be "own work", but is it really better than verbatim quotes and links to external content? I don't think so.
If you reword someone else's work and do not cite it, that is still plagiarism, and technically illegal since we get paid for our content. Verbatim quotes are fine when sourced, as long as that is not all there is.
I'm quite sure that it's legal to read an article and then write a new article from scratch, containing nothing but the ideas and facts in the first article. (though of course, it may vary over different jurisdictions)
If one is reading several sources and writing a new article combining facts and ideas from several articles, it can even be useful.
i do not have a reference for that specific situational law, but if you find one let me know. I would love to know if that is true or not.