Re: Have you ever tricked out a cheap guitar into something great?
I believe the first step to a "great" instrument is the wood. A "cheap" guitar is not going to be made of good wood. You can spend all the money and effort into replacing all the cheap components- jack, pots, caps, switches, pickups, hardware, tuners, nut, strings... and you're still left with a bunch of good parts on mystery/garbage wood. The phrases "polishing a turd" and "putting makeup on a pig" come to mind.
"Inexpensive" gutiars these days are decent, usable instruments. "Cheap" guitars from when I was a kid were guitar shaped pieces of trash.
IMO, if you're looking for a good guitar, get a good guitar. If you're looking for an inexpensive guitar- find a decent inexpensive guitar, replace the parts that need replacing. Dumping a lot of money into a cheap guitar to make it good doesn't make a lot of sense to me.