[This started out as a comment to Tim's post, but I hate the comment box's confines -- in a very literal sense, I couldn't see my argument past the third line.]
"Originality" is, I think, a disingenuous concept, particularly in regards to the creation of art (which is, by its very nature, not "original" at all, but simulacrum). I would argue that many, many, many of our contemporary American short story writers, most of whom would likely turn up their noses at explicit appropriation and/or retelling a la Seth Grahame-Smith take not just "part of [their stories'] soul[s]" from Chekhov and (Dubliners era) Joyce (not to mention Freud), but lift sentiment and aesthetic wholly from those writers and their works without giving it a second thought. Whether or not they concede the point, they are retelling Chekhov and Joyce (and Freud, always Freud) and all of the writers who themselves were retelling Chekhov and Joyce and Freud. Why do we need that retelling? What exactly is the point, when we have Chekhov and Joyce and Freud?
We writers are all dealing with the very small set of emotions that can be conveyed by the written word. We are all retelling the small set of experiences that comprise human existence. There is a lifetime of stuff out there to do and think for each and every one of us, but, in the aggregate (and over the course of human history), it doesn't amount to much. There is nothing new under the sun. Plot points, characters and all fundamental elements have all already been used, somewhere, in some form, by someone. We make our small adjustments and call it "original," and I have no problem with that so long as it is understood as a provisional originality, an asterisk as it were, but to then delineate that from a "retelling" is, I feel, to fail to see that, at the very least, we are always retelling our experiences in the world, our thoughts and our attitudes towards these thoughts, all also fictions that we tell ourselves in order to navigate our everyday existences. Fictions, I might add, that we navigate in part through our engagement with other fictions: our education, upbringing, folklore, even the advice and opinion that we give and receive on the most mundane things, like which tires to buy and how to change them. Remember, Christians and Jews, that God made you in his image, a retelling from the start, and that our present understanding of what makes us human rests in large part on a science (AI) that is back-engineering this original retelling through what is itself a retelling by scientists and philosophers.
My point, in case it was buried in the various strands of argument, is that, whether we realize it or not, when we sit down to write, our tools, the sentences and characters and images we put down on the page are appropriations from somewhere else, retellings of something or other. Write what you know, right? Writers know books. Visual artists know visual art. Musicians know music. To ask them to disregard their particular field of expertise, the part of their lives they have presumably lived to the fullest, when it is time to create is to tie their hands behind their back. Joyce's Ulysses did not spring Athena-like from his brain (or Dionysus-like from his thigh); it came from Homer, at least in part. Homer (if he existed and wasn't just himself an aggregate) got the good word from somebody else. Isn't it at least a little suspicious that, the further back we go in the history of literature (Homer, for instance, or Pound's beloved troubadours, or Shakespeare), the more questions of authorship are raised? I don't mean "who wrote this?" in a Barthes sense (or maybe I do, also), but rather the doubt that any one person wrote it at all, much the person or persons we mean when we speak or write those names. Literature becomes collective the further back in history we go, appropriation less an aesthetic consideration than simply a fact.
Appropriation, it seems to me, is taking an existing thing and putting it into a new context. Retelling is clothing a preexisting story in new details. In terms of originality, it doesn't make any difference if these borrowed elements are characters taken from history or fiction, structure, form, language, fabula, sujet, etc. This is, on a very simple level, what we do when we write. Some writers acknowledge their debts, others don't. I don't really view one as more honorable or more valuable than another. (To come back to my earlier question) Why do we need that retelling, if literature is, as Ezra Pound (an appropriator himself) said, "news that stays news?" Because the elements that we appropriate and reappropriate are important. The fact that they are reused is the artist's way of assigning importance to them. There is nothing ignoble or cynical in this. It is in our nature. It is very necessary.