Andy, I'm in complete agreement with you about Houston's God-awful caterwauling version of what used to be a beautiful, understated, genuinely heartfelt Dolly Parton song. For me, it is the worst cover version ever (and that includes any of the myriad of horrors spawned by the dreaded Westlife).
Cover versions are not in themselves evil though - Dolly's mate Emmylou Harris springs to mind as someone who has come up with some real crackers over the years - but it requires someone of real talent to put their own mark on a song, rather than just make a third-rate karaoke version of it.
I've mentioned this one before, but when it comes to good imaginative (and chuffing funny) cover versions, I can't help thinking this original:
http://uk.youtube.com/watch?v=FTH2fDzyqOM&feat ure=related
is vastly improved by this cover version:
http://uk.youtube.com/watch?v=vy9uoZmAde8
(Warning - strong language in both)