Not talking about Hendrix covers exactly, but some great players like Ulrich Roth and Frank Marino have made fantastic Hendrix-influenced music.
I saw Frank Marino a couple of weeks ago, his All Along the Watchtower was great, but then the whole show turned into a Frank Marino solo guitar jam and he lost it as far as most people were concerned. He was playing 20 minute solo jams with no real substance to them (other than an incredible amount of volume!). It's a shame because I saw him about 12 years ago and he did a great show (though I think the fringed leather outfit might he had on be the same as he wore last time!).