I've been having an ongoing dialogue with Dan Green about the uses of teaching literature. Dan's latest post on the subject is here.
Unfortunately, I am so swamped with work right now that I don't have time to respond intelligently. All I can say right now is, I find the "literary literary" way of thinking to be a bit theological. (I hope I get a chance to try and explain what I mean by that soon...)
I can point people, quickly, to Scott McLemee's mini-biography of Helen Vendler in the latest Chronicle. Dan gets a mention there for his post on Vendler's Jefferson lectures; he generally agrees with Vendler on things.