I think you can either have it one way or another. Stories are either stories and everyone can use them, or stories are culturally specific and sensitive. The little mermaid (as written by HCA) is very much a white cultural seafaring myth and that should either be respected or not. If not then we must drop the facade that some stories belong to some people. If you wouldn’t be happy for a white woman to play an African sea princess then you have no argument to make here.
That said, if we agree that certain stories are out of bounds we must do more to ensure that the truly excellent mermaid-esque stories from around the world are given equal billing and broad appeal. There are great stories overlooked in favour of HCA fairytales and that needs addressing.