Literally outraged

A while back, I looked up the word “literally” in the dictionary. What I found horrified me. Behold:

lit·er·al·ly
1 : in a literal sense or manner : actually; <took the remark literally> <was literally insane>;
2 : in effect : virtually <will literally turn the world upside down to combat cruelty or injustice — Norman Cousins>
usage Since some people take sense 2 to be the opposite of sense 1, it has been frequently criticized as a misuse. Instead, the use is pure hyperbole intended to gain emphasis, but it often appears in contexts where no additional emphasis is necessary.

Is this some sort of cruel joke? How can a word mean both actually AND virtually?? Of course, literally is the adverb of literal, defined as:

lit·er·al
1 a: according with the letter of the scriptures b: adhering to fact or to the ordinary construction or primary meaning of a term or expression :actual <liberty in the literal sense is impossible — B. N. Cardozo> c: free from exaggeration or embellishment <the literal truth> d: characterized by a concern mainly with facts <a very literal man>
2 : of, relating to, or expressed in letters
3 : reproduced word for word : exact, verbatim <a literal translation>

Where exactly is the need to water down a word to fit the incorrect usage? While this isn’t the first time the definition of a word has completely done an about-face, if you want to change the meaning of the word, at least change the entire definition to “virtually”. Now any time somebody uses the word literally they need to be asked whether they actually mean literally, or do they mean “in effect”? Until now, if someone posed that question, they might be seen as a ninny – some sort of pretentious word-corrector who is out to make themselves look smart. Now, I’m not so sure. I don’t quite know how often there’s a vital distinction between the two usages, but to institutionalize the double usage just seems wrong to me.