Barry:

The proper term for "literal" translation is "formal" equivalence. This renders in a target language in a form and with a wording that is as close to the original language as is possible (at least that is the claim). The problem is when idioms and such are used or when words appear that are capable of beign renered in a variety of ways (or other formal ambiguities appear). Is it really as clear to leave an idiom ambiguous and stated in the form in which it is presented or to translate the meaning of the expression (ie, bring out the force of the idiom more directly.)? The fact is ALL translations intepret and are forced to do so in making interpretive decisions. No translation theory prevents this.  (eg, this is always the case when a word can have more than one possible meaning in a context in which it appears -- ie both meanings could make contextual sense and you have to choose one that is intended based on judgments about contextual factors). 

As for your remark about the Reformation (it is baffling to me). Yes, there is no magisterium, but interpretation remains (and the judgments that go with it in rendering a text or a translation remain). So unless we declare what a text is by fiat, we still have to work to render the text and develop what that rendering actually means in terms of intended force. Dynamic equivalence simply says the goal is an attempt to bring out that intention more explicitly. 

With regard to the choices different translations engender, as your education at DTS made clear, that is part of the sorting out process of determining what a text might mean versus what it does mean as a way moving to the divinely intended meaning. My point was not that all renderings are equal in value, but that being aware of what a text might mean may point out to me its meaning (by bringing to my attention a rendering I may not otherwise have seen or considered). We all know that grammar and syntax alone does not guarantee meaning, but a combination of factors associated with the given context of a passage.

Hope this helps to clarify what was unclear to you.