For point 3. - it's exactly the same with code that's not literate. Writing code is ultimately about expressing ideas using a language, which is really much closer to writing a novel than to drawing a plan for a bridge. As such, if you want to make your code understandable to other, you have to learn to write well. Just like with novels, there's no problem with having a personal style, or a specific flavor that comes from how you use the language, how you structure your sentences and paragraphs, how you guide a reader through the story.
In other words, the style varying between people is not a problem - bad writing is. And, unfortunately, in my experience very few programmers are capable of consciously producing good writing. The fact that most of the docs out there are barely-legible trash is a proof of this.
I'm sure that reading literate code from Charles Stross would be a blast. It would be exciting, sometimes surprising, but still clear, easy to navigate, structured in a way allowing for extension within a well thought-out framework. Unfortunately, when people without his talent try to use LP, they produce things on par with that unfinished fantasy novel you started writing in 8th grade.
Programming requires a bit of talent, but you can get by with lots of hard work. Literate programming is much harder than that and requires a lot of talent to be beneficial to the codebase. Without that, your LP code will be Fifty Shades of Twilight, and honestly, we don't need more of things like that.