But isn't this what young writer's are often encouraged to do? Take a well-known tale, and change the setting..?

I don't see anything funny about this. James Cameron had enough money to put WHATEVER HE WANTED on the screen, and he chose to go with reheated Disney leftovers. Why couldn't he come up with a truly original, inventive story? That's not to say that new stories can't include themes or motifs from other stories, they all do. But I think I would be justified in calling "The Matrix" original, for example, even though it had motifs from other movies and stories, because the story was entirely the Wachowskis' own.

The setting and the details of the Matrix were original. The story is not. Heroes Journery. Luke Skywalker, even borrowed the from the Christ story for the savior aspect in the later films. It's all in the details. There are not that many stories out there in certain genres. It's how you choose to execute the story and the setting you place it in that makes a person's story unique.