Chris Roberson has a long and interesting post about FanFic, mainly gleaned from work done at the MIT Comparative Media Studies Program. The central argument here appears to be that FanFic is no different from the sort of extension of existing work done by, for example, Kim Newman (who is published by Chris’s MonkeyBrain Books). I particularly like this bit:

If anything, modern conceptions of copyright have slowed down a long-standing tendency of people to retell existing stories. Fan fiction revitalizes that creative impulse, operating in a world where many different people might retell the same story and in the process, expand the range of potential interpretations of the source material.

On a similar note, see this essay that Gary K Wolfe wrote for Emerald City.