Since I found this site, I've never been able to square with its site definition. That's a lot of what kept me away.
On the one hand, the most popular topics - reccomendations, story identification, and reading order - seemed to me inconsequential and uninteresting. Their utility is obvious, but generally speaking, these are the opposite of expert questions. These are (usually) trivialities and everybody-can-answer questions. On a more active site with wider scope (e.g. SciFi), these questions might be a mere nuisance in my own opinion, but when they seem like the primary focus of the site, they drown it out. It becomes a site that discourages visitors who were hoping for more than that.
On the other hand, the SE format seems an extremely poor fit for getting into deeper literary discussions. Analysis of a work can be structured very naturally as a dialogue; I honestly don't see what can be gained by shoehorning it into a question/answer, problem/solution format. I never have. And while I wasn't very active on the site, I did peek in from time to time, even gave a shot or two myself, and never saw anybody manage to get a serious analytical discussion off the ground at a level that interested me - and I think the SE format is the primary reason for that.
Regarding both these categories of questions, my feeling is that these questions work just as well or better on a regular forum than they do on a strictly-formatted SE platform. This being the case, SE hampers rather than helps.
I can see two ways out of this in the future - though I'm very dubious about both of them. One is, if you've got a large-enough userbase interested in your particular content, then you're good to go. Even if I don't like Lit.SE's scope, if enough people do, then maybe you've got a site. (This is my feeling about another SE or two out there, which I feel have a trivial scope, but there are enough people out there who are genuinely interested in it.) But there's really no good way to guarantee that - that userbase might well simply not exist.
The second is, if you figure out a type of question that works really well on SE, you could base your site around that. Again, that type might not exist, or might not have much of a following. But if you did find one, it'd be a new direction. One of the reasons I'm optimistic about SE betas in general is because it's possible, through experience and effort, to gradually develop new types of questions - questions you couldn't even think to ask beforehand, because you never had the venue or the culture for it.
In conclusion, an observation from my own home field that'll be pertinent here too. A beta is an experiment, not a foregone conclusion. That means that, in all probability, you didn't make any mistakes. You tested the viability of the concept, and you found it. Maybe you've gained some important insight into types of questions that can work, or what type of post gets what type of response. Maybe that insight will help form some other related proposal - but maybe this topic really isn't a great match for SE.
OTOH, if you think it's a great match for SE, capable of producing great content - well, then should be able to describe what and how. And that'll be the next proposal.