Since it was installed to insulate the room below and though it has become compacted and lost some R-value it still is insulating. How ever little that may be.
Also I would be suspicious of harmful additives used at the time that can cause health issues. Disturbing this stuff will only allow dust to become airborne.
Lastly, why incur the added expense and effort that would come with it's removal? It makes me shudder to even consider it!
Best plan is to seal all openings to the living space below with foam and caulk. If you plan on using rolled insulation lay it parallel to the joists. If you decide on more lay the second layer perpendicular to the first (like plywood is made).
Or you can blow in insulation which is faster,but takes a bit more planning.
Try to achieve a total R-value of 38 or higher if your in a cold winter climate.