As a theater critic in New York, I see my fair share of "post-modern perversity" in the staging of classic plays. I would not, however, paint the subject with as broad a brush as Mr. Billington does. The defining line in establishing what is to be applauded and what is to be condemned, it seems to me, can be found in the second paragraph of Billington's piece -- in the distinction between "egotistical exhibition" and "textual exploration". When a director's clever ideas become unhitched from the original text, the exercise fails; on the other hand, when those ideas are in the service of the original text, the resulting theater can be an illuminating experience.
Compare, as examples, The Public Theater's staging of HENRY V in Central Park this past summer with Moonwork's currently-running production of JULIUS CAESAR, which has a far lower profile. In the former, director Mark Wing-Davey entertains the audience with a series of concepts which are untethered to anything in the script (or even to each other). The result is disastrous. In the latter, director Gregory Wolfe rethinks the play in terms of a contemporary American presidential campaign. The rethinking resonates for today's audiences without violating the intent of the original.