I bet you'd end up with silly-looking, embarrassing pastiches of no lasting value, maybe good for a chuckle or two because of contemporary allusions the readers would recognize.
Like Kick-Ass, huh? Its authors certainly don't seem to treat it (or its audience) with much respect. Or like, for that matter, Don Quixote itself (it was supposed to be a silly comedy and a lampoon of chivalry books, not the Best Novel Ever it's become... well, Part I was; part II takes itself more seriously).
The goal is to use modern, more sophisticated tools to make something better than the original. If your result is a "silly-looking, embarrassing pastiche of no lasting value", you've failed in your task as a writer, and need to try harder. And, of course, "silly-looking" is a subjective qualifier, but it's the job of a good writer to properly anticipate audience reactions; I'd even say it's their main job. If by "embarassing" you mean "will lower your status in the eyes of a certain demographic, whose cooperation you need in order to achieve your goals", then, yes, this is a crucial factor that should be accounted for, and pre-empted.
To sum it up, if the result is a "silly-looking, embarrassing pastiche of no lasting value", you need to try harder, because you weren't doing your job properly.
What are the 'modern, more sophisticated tools'? I think that's one of the things I don't see from your post.
From EY's Facebook page, there were two posts that got me thinking about fiction and how to work it better and make it stronger:
I was wondering if we could apply this process to older fiction, Great Literature that is historically praised, and excellent by its own time's standards, but which, if published by a modern author, would seem substandard or inappropriate in one way or another.
Given our community's propensity for challenging sacred cows, and the unique tool-set available to us, I am sure we could take some great works of the past and turn them into awesome works of the present.
Of course, it doesn't have to be a laboratory where we rewrite the whole damn things. Just proprely-grounded suggestions on how to improve this or that work would be great.
P.S. This post is itself a work in progress, and will update and improve as comments come. It's been a long time since I've last posted on LW, so advice is quite welcome. Our work is never over.
EDIT: Well, I like that this thread has turned out so lively, but I've got finals to prepare for and I can't afford to keep participating in the discussion to my satisfaction. I'll be back in July, and apologize in advance for being such a poor OP. That said, cheers!