There is certainly a solid argument that it would be an infringing derivative work.
But, ultimately, it isn't a question that can be answered in the abstract. A jury would have to look at the alleged source and at the new work and compare them in light of the legal standards provided by the judge with input from counsel for both sides.
In most cases, it would be a mixed question of law and fact that could easily come out either way with any given jury on any given day, and is well within the gray area. Some works might be more transformative than others for a variety of reasons like color, size, the style of the original work, etc.
Also, keep in mind that the inquiry in a fair use defense is heavily dependent upon the purpose of the new work and the way that it is used, the nature of the work itself is only a small part of the inquiry.
An ASCII transformation in the context of an editorial cartoon might very well pass muster, while a similar ASCII transformation hung in an art gallery for sale in isolation with no real "message" might not.
ASCII transformations by students in a graphic design program in an art college might pass muster while a professional artist distributing them in mass produced fashion through a vendor selling them in Times Square to tourists might not.
Ultimately, while the law rarely comes out and says so in so many words, copyright infringement is about commercially appropriating the economic value associated with the original work for primarily commercial reasons, and the context informs the extent to whether that is happening or not. If it is not happening, a fair use defense is stronger, if it is happening, a fair use defense is weaker.
The law, in general especially in common law jurisdictions like the U.S. and England, is incredibly context and fact specific, and copyright law questions of derivative work and fair use are circumstances where this is particularly true.
