Dropping an author's fictional character name

Are you going to jar the readers by doing so? If you're going to throw readers out of the story by making them stop and remember this is a fictional construct, don't do it. If, on the other hand, you think it will work with the tone (surreal or humorous, maybe) and/or be caught only by a handful of readers who might appreciate it as an in-joke, you can probably work with that just fine.

How many times have you read a character refer to a "James Bond" style spy, etc.?

What, like "Dr. Hannibal Lecter lived next door"? I think it depends on the story. If it's a famous fictional character but your book is a drama set in the real world, it would jar me. But if it's satire, it would probably have the right effect.

This feels iffy to me ( though I am not a lawyer, nor do I play one on tv ). If you're including that character as if they live nearby, aren't you placing your entire story in the world that author created?

If it's a League of Extraordinary Gentleman sort of thing, all those characters were older, and perhaps public domain, and that may be why it was okay.

But if I write a novel and say Bilbo's living down the street, then obviously the world is based on Middle Earth.

On the other hand, if it's more like a fictional version of Riverworld, where famous people were transported/reborn, then it's clearly a separate world and a passing mention is still separated from the authors original world.

Like I said, iffy to my eyes.