The SE is kind of neat when you view it as it was: a 20th anniversary special for the fans to show how the films might look with modern effects put in and some of the dated effects re-done, plus some things just for fun's sake (i.e. Jabba, Han's run-in with the stormtroopers), along with restored picture and digital surround.
Fun concept--plus a theatrical showing? No wonder I saw it six times in theatres in 1997.
Where it crosses the line, as was said, was when this becomes an excuse to literally let the original film rot to death. And where Jackson is different than Lucas is that he can accept that his film was made at a certain point in time and certain time in his life--the SW SE is fun, but it should never let you forget this. It has, and thats why the original is no more. Lucas doesn't have to acknowledge that SW was a film he made in 1977 when he was 33 years old, because he can just look at the SE and live in the fantasy.