Have you ever used Popplers.  They have cute, simple musicals for elementary and middle school. 

I think Oliver! - has the literary tie in you're looking for and, for the most part, it's pretty easy to costume since the waifs can use their own jeans and such - you might even be able to modernize Fagin a bit!

I have worked in Children's Theatre and with high school students for 17 years now--as a director but mostly as a costumer (right now working on my 71st show)  I am having a hard time understanding (believing?) that kids would prefer to wear jeans and tee-shirts.  I can't keep the kids away from dressing up in everything they can get their hands on!  We recently did The WIZ where the pit singers got to design  their own costumes.  (They were on stage nearly the entire show and I used them like a modified 'Greek Chorus') Anyway--I told them Urban and Edgy.  One guy dressed as a sort-of Jack the Ripper.  He said it was 19th century urban and edgy! NONE of them looked like regular every-day teenagers--they all created a character and dressed themselves accordingly.  Hasn't everyone ever noticied the way your show gets soooo much better once the actors put on their costumes?  They get 'away' from themselves and act like the character.  I think a costume gives the student 'permission' if you will ---to be someone else and to sing and dance and be creative on stage.