Hi all,
I'm afraid I don't know much about the origins of "Spanish Fandango", apart from the fact that it was originally a composed parlor guitar piece. Steve James described its origins in a long car trip that we took with Orville Johnson to the Greater Yellowstone Music Camp last summer, but I don't remember the details.
Re the notational system you describe, Pan, I think that that approach to notating pieces in other than standard tuning is of pretty long standing. I have a recording of some violin pieces by the Baroque composer Heinrich Biber, called "Sonatas For The Rosary". They employ a complex religious symbology in their structure, and almost all of them require the fiddle to be put in highly altered tunings, which were called scordatura, to achieve unusual effects, many of which are really striking. Biber assumed, rightfully I would think, that violinists would not at all be accustomed to playing in the various altered tunings he had devised, so he notated them as though the violin was in standard tuning, figuring that it would be less disorienting to hear a different pitch than you were reading than to try to find a note and compensate on a string that may have been altered by as much as a fifth. The music sounds great, but it must drive the players crazy, to be hearing different notes sounding than they are reading. In such an instance, I think tablature would be a far preferable system.
All best,
Johnm