Since I was the one who brought up the three-step test, I can perhaps respond to that part of your question.
To provide you with some context, the Berne Convention includes a clause on that three-step test. As far as exceptions go, the test is applied under the Berne Convention in the European countries that signed it. The idea is to try to limit the scope of exceptions to copyright.
So what are the test's components? First, exceptions must be limited to special cases. Their scope should not be general, but rather restricted to limited cases—special cases. Second, the exception must not be in conflict with the normal exploitation of the work in question—for instance, a musical work. Finally, the third part of the test aims to ensure that the exception is not unduly damaging rights holders' legitimate interests.
I have a suggestion with regards to this. Currently, this test is only used under the Berne Convention. In order to finally better protect rights holders' interests, the test should be adapted and included in the Copyright Act. That way, the legislation could bind the courts better when they consider the scope of exceptions. Otherwise, I think it's too easy for the courts to say that the three-step test is part of an international convention we are not bound by, and so that convention has no force of law within our legislation as such.