This post links to RAnn's Sunday Snippets.
It's no surprise that the more clever the West becomes, the less inclined it is to take the Bible literally. Not that cleverness is a bad thing, but it does tend to feed The Pride Beast. And I'm not saying every Scriptural jot and tittle should be taken literally, if only because God can speak though the writers by using simile, symbolism, metaphor, and parable.
On the other hand, we aren't able to fully perceive the reality around us, even with the help of instruments. Are there more dimensions? Do time and space twist and fold without my noticing? Are there wormholes? Does Heaven surround us like the Cloud of Witnesses? Is the Universe a sphere, flat, or saddle-shaped? Given our limitations, is it possible that stuff in the Bible is literally true, but we just can't tell?
Look, here's an easy example. In Catechism class, we cover Isaiah 22, especially "I will place on his shoulder the key of the house of David; he shall open, and none shall shut; and he shall shut, and none shall open." Usually a child will notice that resembles Matthew 16, and ask if the key is real. We'll sort out that it's probably not a physical key that can open the House of David, since "house" isn't a single building, but an extended family comprising a kingdom. But it might be a physical, ceremonial key that symbolizes the power invested in the keyholder. Or it might be a physical key that actually opens a gate, or a room, or a chest full of money, and also serves as a symbol of vested authority. In any case, I think Hezekiah's key is real and physical whether it unlocks anything or not.
Later we get to Matthew 16, including, "I will give you the keys of the kingdom of heaven, and whatever you bind on earth shall be bound in heaven, and whatever you loose on earth shall be loosed in heaven." Right away the kids ask: "Are those real keys? Well, first you tell me: is Heaven a physical kingdom? I don't think so. Right- where does your body go when you die? Does it rise up into the clouds like Jesus? No it gets buried. Yes. What goes to heaven? Souls. Yes. Are they physical? Umm...no? Right. But are souls real? Yes! Right- so some things are real even if they aren't physical, even if we can't sense them or see them with telescopes, microscopes, x-rays or whatever. So I think they are real keys, but they aren't physical, because the kingdom isn't physical. Yes? I saw a painting of Peter and he was holding regular keys. Yes, he's often shown with physical keys; they are a symbol of his authority. But how can a key be real if I can't hold it? I don't know- the same way a kingdom can be real even if it's invisible. The Bible is literally true in saying there's an invisible kingdom; and may also be literally true in saying that kingdom has keys."
The idea that there are real things that we only partly perceive, or don't perceive at all, but take completely on faith is normative in Catholicism. E.g., the miracles in the Bible are literally true, although what makes them happen is impalpable. And by extension all the sacraments are real, although their energies are undetectable as well. Put another way, the Church expects us to think of reality as being much bigger than what we can directly access via our sin-flawed physical existence; and thus Catholics are primed to understand the Bible more literally than anyone else.