Chad Fowler and Kevin Barnes recently considered the idea of The Big Rewrite:
I’ve most often seen the desire for The Big Rewrite where Technical Debt is so high that developers believe that throwing away the existing code and starting over is cheaper than fixing the problems in the code. It’s technical bankruptcy.
Of course, if (like most developers) you can’t actually read source code, your bankruptcy threshold will be awfully low–but that’s another rant.
I very much appreciate how both Chad and Kevin analyze the other costs and drawbacks.