Plagiarism and Music

The less short of the short people has begun studying the clarinet. In learning a small piece of Haydn's Surprise Symphony, her teacher was surprised when she added her own ending beyond the piece she was given to work on. Sensing (quite correctly) that the short person would be motivated to play by being given the opportunity to be creative, the teacher asked her to bring in her own composition the next week.

Taking this assignment very seriously, she began to work on her initial opus. she began with the notes at the end of the first line of Mary Had a Little Lamb, put them at the front of the line and worked from there. TheWife expressed some unease about her appropriating the work of another song for her own piece, but I quickly said that this is a standard practice among composers of serious music who regularly work on variations of a theme from another piece or base works on beloved Hungarian folk songs.

The question is whether this is in fact the sincerest form of flattery or theft. You can't quote in music the way you can in essays. Surely there is a line that distinguishes stealing someone else's ideas and using their work as inspiration and a springboard to a new creative place. The question is how we draw that line. The shorty seems safe, but how far could she push it?