My question is similar to this one
although there are some small distinctions that (I think) make for a different question, which I write below:
I was a referee for a paper submitted to a high-caliber journal. For two cycles, I had recommended "major revision" because I felt like the problem was a useful one, but the writing was a mess and the methodology was needlessly complicated. After the third revision, I recommended "reject" because I worked through some analysis on my own, over the course of a couple of months, that the methodology was actually fatally flawed in a way that made the manuscript unpublishable for this particular journal. I shared this finding with the authors and they were understandably upset (and quite contentious about it), but they did not identify any flaws in my reasoning. The editor wrote me a note to thank me for an "extremely thorough and helpful" review.
In the time that has passed since then (just under a year), I have continued refining the analysis that I did, to the point where I now have a result of my own that is probably publishable in a lower-tier journal. The authors of the original paper have not made their manuscript available online, with the exception that the contents of the original paper are one of the chapters of the student co-author's dissertation, which is publicly available on the university's website.
Is it ethical for me to submit my paper to a journal, citing the dissertation and giving it credit for introducing the problem? On the one hand, the material that inspired me to study this problem has been made public, but on the other hand, I feel guilty for the amount of time that the authors spent on revisions that were ultimately fruitless, and this could lead to the original paper having a much more difficult path to eventual publication (somewhere).