Fanart is as fanart does, and I don't play in those waters. But I probably wouldn't be offended if someone took one of my stories and used it as a basis for her own stuff. That's where the oral tradition thing comes in. 'Thetis of the shining breasts'- ohh neat epithet I'll use it in my next epic.

Plagiarism is one thing; reworking a source is another. I've seen the Japanese do it- someone's cool trope borrowed and reworked over various doujinshi, and I thought it was neat. I need hardly say, if it was a Japanese reworking my stuff- or hell, just translating it- or hell, just sticking it up on her website- I'd be over the moon. But that's a little different, not to say unlikely.