I think that it's possible for a book composed entirely of excerpts to be an excellent, creative, and original work. The key question for me is whether the author stole someone's novel and changed some bits, or genuinely pasted together pieces from a body of work in order to create something new.
Having not read the book, and seen no real analysis of its content, I can't comment on whether this was achieved, but if it was I don't think it flies in the face of copyright (especially as applied to literature).
This hits the nail on the head. Excellent sampling takes a bit of an old work, and while referencing it, creates something new out of it. Does this book create something new? or does it simply parrot the old? Is the 'sampling' (or plagarism) a purposefully act, and is it done for a justifiable literary reason? What does referencing, or perhaps more accurately, replaying Strobo (or whatever the original work was) mean within the new work?
The answer to those questions determines whether she's a dirty, lazy plagarist or a Girl Talk-esque genius. Without reading the book, I'd have a lot of troubles making that judgement call.
(All that said, I think not immediately giving credit where credit is due up front is ridiculous and unethical no matter what she's doing. Whether or not it is (or rather should be) illegal is different story.)