When Borges summarizes some plots from Hawthorne, he makes them sound almost as though they were written by Kafka. He doesn't make this particular connection in this article, but I can make it because I've also read his essay on Kafka's precursors, where he makes the point that several texts bearing no relation to one another all seem to prefigure Kafka's writing. Therefore the only connection between these various texts emerges later, in Kafka, and literary history is retrospective, created by the present to explain the past. This is the same insight as Annette Kolodny's that "literary history (and hence the historicity of literature) is a fiction." I can relate this to Gadamer's hermeneutics, putting this all together.
When I compare to things by relating them to a third, I am constructing what we might call the hermeneutic triangle. I am the fourth element in this relationship, and then if I communicate it to someone else, there are five elements. It is easy to see after a while that there is an degree of variability or chance at each step of the way. For example, someone else might not see Kafka in Borges's Hawthorne, but would draw other connections. Someone else might not agree with my reading of Borges.
I've always thought "Pierre Menard" has been interpreted rather badly. Standard interpretation depend on the notion that Cervantes's original text is a simplistic reflection of conventional ideas of its time. We know this is not Borges's actual view, if we've read "Magias parciales del Quijote." The Quijote, like Hawthorne perhaps, is already modernist before Menard's rewriting. Many interpreters also pass over the weird, antisemitic narrator of the story, and other devices that severely undercut the authority of the narrative voice. Nobody has noticed that Menard's other writings, many of them having to do with Paul Valery, are almost as fascinating as his rewriting of DQ. Here is another hermeneutic five-part relation, in reverse it would be: You, Mayhew, Borges (Menard?), Valery, Cervantes.