Sorry to break it to you, Apoppin, but if you do carefully read the usage in the tect you have provided us from the Merriam Webster dictionary, you will note that it states that usage of the word in as an intensive before a figurative expression has been immensely criticised. Thus, it seems to me that its use in that sense of the word is simply not the "proper" way but what is informally accepted.
Maybe the Oxford English Dictionary will serve us better here.
Edit: Okay, here's what the Oxford English Dictionary says regarding this: "[3] b Used to indicate that the following word or phrase must be taken in its literal sense. Now often improperly used to indicate that some conventional metaphorical or hyperbolical phrase is to be taken in the strongest admissible sense. (So, e.g., in quot. 1863.)
1687 Dryden Hind & P. iii. 107 My daily bread is litt'rally implor'd. 1708 Pope Let. to H. Cromwell 18 Mar., Euery day with me is literally another yesterday for it is exactly the same. 1761-2 Hume Hist. Eng. (1806) V. lxxi. 341 He had the singular fate of dying literally of hunger. 1769 Junius Lett. xxx. 137 What punishment has he suffered? Literally none. 1839 Miss Mitford in L'Estrange Life (1870) III. vii. 100 At the last I was incapable of correcting the proofs, literally fainting on the ground. 1863 Fr. A. Kemble Resid. in Georgia 105 For the last four years..I literally coined money. 1887 I. R. Lady's Ranche Life Montana 76 The air is literally scented with them all.1902 Daily Chron. 10 Dec. 7/2 A contemporary states that Kubelik has been `literally coining money' in England. 1906 Westm. Gaz. 15 Nov. 2/1 Mr. Chamberlain literally bubbled over with gratitude. 1922 R. Macaulay Mystery at Geneva xiv. 72 The things `they' say! They even say..that `literally' bears the same meaning as `metaphorically' (`she was literally a mother to him,' they will say). 1960 V. Nabokov Invitation to Beheading iii. 31 And with his eyes he literally scoured the corners of the cell. 1973 Good Food Guide 176 `Crabs and lobsters are literally to be found crawling round the floor waiting for an order,' reports an early nominator."