The usage I mean is most familiar in contexts such as
"I skipped breakfast and lunch, so by dinner I was literally starving to death."
Usage books object to this construction on the grounds that the speaker here is certainly not actually starving. But it's easy to see such constructions as simple hyperbole, which of course speakers deploy all the time.
The question is whether the speaker intends the expression as exaggeration or has actually reanalyzed the word's meaning, thinking that literal means figurative. In sentences such as the one above, it's not really possible to tell, since either reanalysis or exaggeration could explain the sentence. Indeed, a simple substitution of "virtually" or "metaphorically" in the sentence above actually weakens the intended emphasis, so even if reanalysis has occurred, a sense of exaggeration remains.
Within a blog entry on the Duke Lacrosse scandal, I found this gem:
Buffalo buffalo Buffalo buffalo buffalo buffalo Buffalo buffalo.
Which means "Bison from Buffalo (that other) bison from Buffalo intimidate (themselves) intimidate (other) bison from Buffalo."