What is scriptural literalism? This is the debate or discussion taking place at the God or Not God Carnival. A scriptural literalist could be one who rejects the various genres which make up the Bible presuming that every story is written to record some event, but I can't think of any religious author who would make such a claim.
Or the phrase could relate to those who speak of the "plain meaning" of the text. I wouldn't be as troubeled with such a view if it wasn't usually linked up with three other things; a failure to recognize the role of the interpretator, the problem of relating a passage in isolation to the whole of a text, and relating passages to a religious framework.
If these are not acknowledged then having a discussion over the Bible can be frustrating at best. The best antidote is a sense of history where we can seek to understand the historical context of the texts we're reading, where we can examine our own history to see what we bring to the table and the history and meaning of the religious faith from which we are operating.
The first can be done through reading up on historical critical scholars in biblical studies. There's a slew of volumes written for the layperson who is trying to develop a sense of the historical context. My own congregation, for instance is doing a series on the historical Jesus some of which is reliant on the work of the Jesus seminar.
The latter two can begin to be addressed by addressing what primary principle does one hold fast to by which the meaning of texts can be related to each other and related to one's religious committments. Sometimes it's described as the gospel within the gospel. The quote I posted a few days ago from Augustine can be an example.
For Augustine the principle he urged from which to read scripture was that which lead to the increase in the love of God and of neighbor. For Martin Luther it was salvation by grace apart from the works of the law. For many feminist theologians, it's those passages which affirm the dignity of women and the vulnerable in a given society.
Whatever it is, this becomes one's guiding light in making sense out of the diverse accounts in scripture. Everyone has something like this. The key is to recognize that we are in fact doing it, thus taking ownership of the way one orders and makes sense out of scripture. To do that of course is to recognize our role in this process.
Some are uncomfortable with this, because it brings home the limits, historical and otherwise, in our use of the Bible and other sources in making religious claims. But I'd argue this is a good thing to embrace. It reminds us that we are human not God. That our readings are an engagement with other people over the centuries, not something ahistorical and above criticism and revision.