Dante wrote fanfiction. It's called the Inferno.
Movies create fanfiction. It's called "inspired by true story" or "historical fiction".
Fanfiction gets a bad rep when they do it because they're not considered "real" literature.
I can respect that these living people can get disgusted if they read something offensive about themselves. But fanfiction is more contained within its own communities than movies are, and I've seen real people get offended by movies that made money off of selling a twisted image of them.
I am all for respecting people but if we want to bash fanfiction about real people, let's not pretend that gossip magazines speculating that Jennifer Aniston is pregnant isn't publishing fanfiction about real people.