Alright, after some extensive Sackboy research, I've found ways that make Sly's cheap tactics a bit useless.
[Sly's Counter spammer: There are 2 ways to go about getting rid of a counter-spamming Sly.
1st: If you are standing in one place and Sly is going counter, place an electric trap right where you are standing, and when Sly counters you, he will pop up behind you and be electrocuted.
2nd: Go up to the Sly and do an Up-grab, go directly under them, and do this combo: (Up Square, Up Square, Down Square) for 80+ AP.]
[Barrel Reflector spammer: A lot of Slys will tell you that their explosive barrel is the best counter in the game, but Sackboy has 3 reflectors. The best are his fan (Side+O) and his Bounce Pad (Down+Square). You can go up to a cake that a sly reflected and press Down+Square on it to reflect it back. The sly will think he countered it but will get hit by it when he runs against it next. Barrel spammers are also easily comboed, do the following combo on Slys:
(Side triangle, Down+O, Square, Square, Up Square, Square)
Or up grab combo them, but it's riskier.]
Avoiding Sly's Supers:
Level 1: If you have a checkpoint active, use it as soon as you hear that fat hippo.
Level 2: Easily dodged by everyone, but a checkpoint far away from him would be best.
Level 3: On a big map, place a checkpoint on the far end of the map, then go to the other side and wait for the Sly to try to attack you. That will slow him down tremendously, though you might get killed after your checkpoint use. I've had a sly completely give up on killing me with it because of the checkpoint.