I don't know if I personally would spend as much as I did on a Squier, but I would definitely do a lot. I'd probably try to clean up and use all the hardware I could. Take a look at LesStrat (not the guy, but his guitar) and you'll see what a little work can do to a Squier.
Of course, I'd likely do the same to a high-end MIA Fender, too.