I agree, DL, I'd be hesitant to describe what was going on back then as "negotiation".
I think that one of the conditions of working for Gaines was that he kept the artwork. If FF said no, I keep it, then it was simply a matter of one or the other weighing the money against the art. Either Gaines valued having a Frazetta story more than his "rule" or Frazetta valued the money for the job or the "prestige" or working for EC more than his art. One or the other happened, but it was probably more a battle of wills than a negotiation.
Gaines was pretty dogmatic, and he was pretty canny keeping all that art, but he also respected those artists and wanted the best for his company. Since Frazetta could have gotten work just about anywhere, perhaps the "rule" about originals turned out to be more flexible, or maybe Frank really needed some money that month.
I doubt that Frazetta's rep suffered at all from the reworking of the Famous Funnies cover for WSF #29. I'd bet dollars to doughnuts that Gaines knew about it and didn't care. After all, this was 1955 and Gaines was fighting for the life of his company. The etymology of one cover was probably not even in his top ten worries.
And, again, I don't think it was a matter of "watering down" the White Indian work so much as spending more effort on other jobs. The romance stories are some of his best work, IMHO, and Eastern didn't pay top dollar, so it HAD to be that the jobs were of more interest to him. Given the interest, he always did his best work. The "contract" or the "rights" or the page rate or anything else appears to have been either secondary or simply unimportant.
My reading of Frazetta is that he ALWAYS took the easy way out. Yes, he wanted to be a comic book artist, but he also wanted to be a baseball player. What I think he wanted was a good paying job that was easy and left him time to goof off. That "definitive" Conan painting was a rush job that he reworked considerably after it was printed. The same is true of many of his iconic paintings for Warren covers - many of which he turned in with the oil paints still wet. He could ALWAYS do better (compare the original Egyptian Queen and Cat Girl covers to their later versions), but the job had to appeal to him. For some reason, the Eastern romance stories did. White Indian must had some appeal, too, just because he stuck to it for so long. He seems to have lost interest in most jobs very quickly - how many romance stories did he do? How many SF stories? Crime stories? etc.
He was a complex genius, but like many geniuses, he was seldom challenged by anyone other than himself. I don't believe that Gaines did more than offer him a choice. And I think that Frazetta simply offered him one back. I suppose that could be called negotiation.
As for asking for original art back, Williamson always got his back just by asking at Toby and Atlas. Kinstler told me that Avon never had any qualms about him asking for his inside covers back. I think almost every publisher of comics treated original art as a means to an end. Most often that "end" was a printed comic book and after that they had zero interest. Gaines wanted it because he valued it. DC wanted it because they viewed giving it back as a weakness or a concession. Most other companies simply didn't give a damn one way or the other. I think Harvey kept the art, too, but they are the only other one that I've heard of - not that I've done a detailed study of the matter.
It's 1 AM here in Paris and I'm getting off of my soapbox. I just came back from a stimulating dinner with Sylvain Despretz and Jean Claude Mezieres and I am trying to wind down. Tossing Frank Frazetta into the evening's mix is the perfect nightcap.
Peace, Jim (|:{>
Again, all of the above is viewpoint and opinion.