There is indeed selective literalism and I agree with many things that you have said. I particularly agree that the Word of God rises up and slaps me. I can rationalize and manipulate my thinking to avoid seeing myself as a sinful, broken man for a while. Then I see in the Bible the character and majesty of God, I see sinfulness and evil of my own heart, and the self-righteous condemnation often becomes simple gratitude that God loved me enough to send his son to justify me. God's word fights through the frivel of self-deception.

However, I think you have to be careful that you don't include the normal usage of language as selective literalism as well. If I said my son was "cute as a button", some would interpret that correctly to mean I think my son is really cute. This is the normal usage (or at least at one time it was normal, the historical context is changing because I'm getting old :)) Others would think I think buttons are cute and that my son looks like a button. This is not selective literalism, but hyperliteralism, an overly rationalistic approach to language that ignores the intended meaning and normal cultural usage in favor of a formulaic understanding.

The measuring stick for understanding scripture is not literal or metaphorical interpretations, but normal, historical, grammatical interpretation (which is what we are using to communicate right now). If everyone took everything I said literally, they would be confused a lot and we would miscommunicate a lot. However, the things that I say that are intended to be understood metaphorically, would be pretty clear to someone who shared the same language, cultural, and historical background (with some exceptions occasioanlly). How much more can we trust that the biblical authors, under the divine inspiration of the Holy Spirit, spoke the very words of God clearly to the people in their language, culture, and historical context.

This is why studying the time period during which the Bible was written, the culture, and the language helps us to understand what is being said. I believe that hyperliteralists on one hand can diminish the Bible's message about God when they ignore the basic rules of interpretation that we use in talking to each other every day. Figurative language, poetic genres of writing, historical settings (OT Israel, NT church) and prophetic writings are the areas that tend to go awry. On the other hand, many within the emerging church today are reacting to this overly rationalistic approach by claiming that clear commands, explicit teaching in the epistles, etc could not possibly mean what they clearly say. In doing this they risk obscuring the communication of God's message or minimizing its value and authority in our lives. God gave it to us so that we will know Him. Our job is to be workman that study to show ourselves approved, rightly dividing the word of truth.

I fear that AJ Jacobs may be using hyperliteralism as an extreme example and then apply his findings to the those who use a normal, historical, grammatical, contextual, approach to understanding the Bible. I have not read the book so I can't say that he is doing that, only that I fear that may be the road he is on. If he does this, he is building a straw man and improperly representing what many Christians believe who come to different conclusions about scripture than he does.

If the main issue is application, not interpretation, then the remedy is clear I think. On the issue of homosexuality, the church must continue to teach that homosexuality is wrong. That believers that practice homosexuality are living in sin and should be lovingly confronted, challenged, and diciplined by the church to repent. Unbelievers that are practicing homosexuality are doing what unbelievers would be expected to do. They should be warned of God's judgement on all sinners (all of us), introduced to the person of Jesus Christ who freely gave himself as a payment for their sin, and equipped by the church to understand the Bible, grow in their relationship with Christ, and live out the truth of God's word in daily living by repenting of sin and accepting God's plan for heterosexuality.

The church should also be following the same pattern in dealing with divorce, pornography, greedy behavior, gossip, and all the other sins that we like to minimize who's consequences destroy families, lives, churches, and our testimony as believers to the world. They should be teaching and preaching ALL that the Bible says not just bashing homosexuality because it's on the approved list of sins to attack.

On the other hand, to be a faithful church, we can not stop saying that homosexuality is sin. Unfortunately the answer for some within the church is that since the church is inconsistent, it should stop refering to homosexuality as sin. At that point the church moves from inconsistent to incomplete, trading one error for a different error. We must be clear about the enourmous width and breadth of sin in our lives and in our world. Then we must be clear that Jesus Christ payed for that sin and calls us to leave that sin behind in response to the love he has shown us.

The issue dealing with women is complicated as the church takes the clear Biblical teaching and principles and applies them to different cultural settings. The Bible is clear that men and women are equal in value, but different in role. I think that the church has failed to elevate women's roles, positions, gifts, and contributions. In general they have failed to value the massive impact they have in shaping our families, churches, and the world in general.

However the answer is not to say there are no roles. That just exchanges one unbiblical mistake (minimizing women's positions) for another unbiblical mistake(changing women's positions). There are roles and interactions that the Bible defines as good and healthy.