Henry Neufeld has up an interesting post, worth more discussion: "A Misuse of the Word LITERAL." I remember once he said at one of my posts on a similar issue, "I'm surprised you haven't gotten any comments yet on this one."
The initial discussion gets us remembering that old construct among translation enthusiasts: literal vs. figurative, or form equivalence vs. dynamic equivalence. We're also talking about uses of words in critical writing commenting on the translation of the Bible vs. uses of the same words in fiction and in translated fiction. Feel free to join in with your thoughts, if you like.