There's a difference between "doing something creative" and "blatantly stealing the music of others to cobble together some sort of deluded fan fiction," hahaha.
Speaking candidly, I've read some fan fiction that's actually pretty creative. I'm not sure who died and made you the arbiter of what is and isn't considered creative, but I'm glad we could go ahead and clarify it in this forum.
"Blatantly stealing" is a pretty heavy accusation to throw at these kids. They're not ripping off the melody of Miss Jackson and trying to pass it off as an original composition in their musical. It's coming out of a place (and as I said before and will admit again - probably a misguided place) of appreciation and tribute for the artist's work.
There's been a lot of musicals (some on Broadway!) in the past that have taken different songs from an artist/band's body of work and formed an unrelated story around it. These kids aren't the first, the only difference is that they're doing it without the rights cleared.
I always thought PATD's music was perfect for the stage. Props to these kids for being inspired enough to write something and execute it, even if they're going to probably get sued.