I see this usage of "literally" more as a dereference, or an unquote. I mean, it takes a dead metaphor and tries to bring it back to live. It means "hey, pay attention to this metaphor!"

If you'd say, "the financial system was melting down", that is such a stale metaphor that it might not even trigger any associations with nuclear reactors. "Literally" forces you to stop and think about molten goo and radiation.

And as such, I approve of it (although it is much preferred to use fresh metaphors than to resurrect stale ones.)