Some of Shakespeare's plays were based off older/other stories.
From the beginning of time, there have been adapatations. We wouldn't have West Side Story without Romeo and Juliet, or Rent without La Boheme. Look at some of the most successful musicals ever....Phantom (based off book), Les Mis (based off book), Cats (based off poems), Hello Dolly (based off a play - The Matchmaker), Camelot (Arthurian Legends), Oklahoma (Based off a play - Green Grow the Lilacs ), Hairspray (movie), The Producers (movie), Guys and Dolls (based off Damon Runyan's stories), Ragtime (based off book), Carousel (based off a play - Lilliom), Cabaret (I am a camera) Heck people, Wicked is based off a book, which was based on another book, which was made into a movie. Even Parade, Chess, Side Show, Tick Tick Boom, are [sometimes loosely] based on actual occurances...
This all said, I really don't have a problem will well-constructed jukebox musicals. Smokey Joe's Cafe was a cute revue, Mamma Mia is fun enertainment that doesn't try to be anything its not, and Movin' Out is a work of dance art. It's the recent onslaught of these types of shows that have people worried - especially the idea that the book can suck as long as the songs are catchy - along with the fear that every single famous musician in history will end up with some ridiculous show of their hit songs while original musicals die by the wayside.
The scary part is that Broadway, underneath it all, is a business, and when it comes down to a choice between some jukebox drivel like Good Vibrations or some original and creative musical that doesn't have a big name attached, which do YOU think the producers are going to choose?
It's amazing that shows like Urinetown and Avenue Q made it. Cheers to the new writers.
There's always room for pathos - and jazz hands.