Okay, um... how about this:
There are three reasons to quote a line from the badfic:
1/ To display a charge, such as a misspelled name, or OOC line.
2/ To show what the characters are doing.
3/ To show off a specific, wording-related issue.
The thing is... the first two don't need to be quoted. If Harry Potter sounds like an elderly man, we don't need to see this:
"You young whippersnappers!" yelled Harry.
"Why does Harry sound like an old fogey?" asked Freckles.
We can gather just from Freckles' line that Harry sounded like an old fogey; the details... aren't all that important.
Similarly, the action of the badfic can be more interestingly portrayed through your own words. Partly that's a style thing - essentially, quoting is how MSTs do it, so paraphrase instead - but partly it's because... well, it's a badfic. If you're letting it tell the story when you can write better than it (and you are a good writer), then you're missing an opportunity to get your words into play.
To take an example, Driftwood mission 5 quotes the badfic in italics maybe five or six times. The first one is to show a specific line that Kaitlyn reacts to - because of the line, not the events. The second is an information-rich paragraph which is just... bewildering. The third is an action which I couldn't come up with an interesting way to paraphrase - there's no need to change everything, after all. The fourth is a spoken line about trivialised rape. The fifth is Hermione declaring in great detail how beautiful Bella is. The sixth is the last line I let them say.
With one exception, I never quoted an action. I described them occasionally in the narrative, but even that feels a bit clumsy sometimes. Mostly I just let the agents react to what was going on, because to my mind, it's the agents I'm there to read about, not (strange though this may sound) the badfic.
Generally, there's two lines I'll quote pretty consistently - the first and the last. Other than that, it's occasional dialogue, and anything where the wording is funny without invoking an unintended effect. If something weird does come of a phrase in the fic, I'll let the agents quote it - like the 'BBBBBBBBBB's they were bombarded with. I didn't need to quote the break, because Selene did it for me.
I'm not saying 'do it this way, only clones of me are acceptable'. Having more quotes than I do is absolutely fine (and part of the reason I have Selene & Kaitlyn step away from the badfic a lot is to keep my word counts down). But doing so extensively just... doesn't feel like it's letting you show off your writing as much as you could.
An example from your story: you quote what I think is the entire 'founders beatify Sue' scene. And yes, it's funny - but did it need quoting? Everything we need to know is contained in Rina's complaint:
"Dear Rowling, even the Founders are in awe of her! And Merlin came after the Founders- he was a Slytherin! They have no reason to be invoking him!"
Tweak that second sentence to something like, 'And Godric wouldn't invoke Merlin - he came after the Founders, and he was a Slytherin!', and you've erased the need to share any of their direct speech.
That's just one example, and it may be that ultimately you'd choose to keep that scene intact anyway for the sheer ridiculousness of it. But I hope it gets at least the gist of my view across. As always, it's yours to agree or disagree with - I'm just hoping to make myself clear.
hS, too many words