I just wanted to add, that if your going to spend time and money fixing a cheap guitar, make sure the body is made of real wood first, as opposed to plywood or some type of glue and saw dust. you can probably do more with a cheap guitar made of wood because the guts and hardware are what made it cheap. <make sure its got a good neck first>
If its made of plywood or dust, then i suggest you drag out the rip saw and customize the body too, its not like you can make it sound worse... imho
I <we> did this to a cheap harmony guitar i bought for 10 bucks, gave it a new cut, then bolted a extra peace of wood on the back to make it the same thinkness as a real guitar, and give it weight and sustain. and spray bombed it black. we dubed it "The Garbage Guitar" it sounds like hell, but kinda has built in distortion. its been sitting in a closet for years, i think were gunna use it as a stage prop or something.
one good thing about a really crapy guitar is that is it not intimadating to play, you know the guitar makes you sound crapyer, so you got nothing to loose, and sometimes you need that to get past wrighters block
Hope someone learns something from that.
Peace World
Tremaine