That's an interesting distinction made.
I'm personally still with the camp here that thinks "literature" is broadly anything that is a collection of written material, however, let's consider that the other camp that are correct in saying that there is also "Literature" with a capital "L" that is somehow more "worthy" than other literature. So, for an author to be worthy of inclusion into this club, you are saying that their whole body of work must be consistently "worthy"?
I'm thinking here of why the same doesn't apply to actors or directors. Take Michael Caine, for instance. He is acclaimed as one of our best actors, and knighted, and has appeared in hundreds of films. However, he has famously said that he treated acting as just a job and took almost any role offered, and while many of his roles are critically acclaimed and in iconic films, many of his performances are in films that are frankly unwatchable.
So, what would happen if it were discovered that before she was famous, Margaret Attwood had penned a series of racy, action-based stories published in cheaply printed magazines under a pseudonym?