I hesitate to be dogmatic on such questions. I do think Dennis's initial example reads better than the chopped up one. But I think we all agree that the issue comes down to clarity. If the writing is clear, I'm not going to quibble about where the paragraph breaks are. If it isn't, I'll start quibbling.
I will take issue with the idea that rollicking good yarns and literature are somehow separated by an impenetrable wall. Sometimes, we stereotype "genre fiction" as being a collection of inferior pot boilers, not worth serious attention. Sometimes, we stereotype literature as being boring, hard to follow, irrelevant, etc. Neither of these generalizations really holds up.
Shakespeare was the most popular writer of his day. What box office records survive make clear that his plays were normally performed to packed houses, while those of other playwrights often weren't, and most of those are hardly performed today at all. Shakespeare is still performed, still filmed, still reflected in a variety of different derivative works. That's because human nature doesn't change, even though the cultural expression of it varies a little. It takes work to get past the difference in language, but the work is well worth it. (By the way, in Shakespeare's time, plays were not considered literature. Real authors wrote poetry.)
Many writers considered literary today were highly popular in their own time, Dickens certainly was. Agatha Christie was one of the bestselling writers of all time. And the reason a lot of ancient writers survived (Homer, Virgil, Aeschylus, Sophocles, Euripides, Aristophanes, etc.) was that they were popular. In those days, since books had to be copied by hand to survive, books that weren't popular would quickly vanish. The survival of the Graeco-Roman works is particularly remarkable in that the triumph of Christianity could easily have wiped them all out, but they were revered enough to survive even that kind of major upheaval.
But that doesn't mean newer works don't have value. Today's popular favorites may well be tomorrow's classics. You don't have to be consciously writing literature to produce material of enduring value. Works meant to entertain can also provide meaning and stimulate thought. They may go about it differently. But are the modern superhero stories really all that different from the stories of gods and demigods then ancient Greeks enjoyed? In some ways, they're very similar. In some ways, the later ones are dependent on the earlier ones. Aqua Man is from Atlantis, after all. Wonder Woman is an Amazon. Thor, though an alien in the Marvel Universe, was originally a Norse god. An episode of the original Star Trek brought the crew into contact with an alien who had once been worshipped on Earth as Apollo. And the list could go forever. The old and the new are in a constant dialog with each other.
I always encouraged my students to read both works that they enjoyed and works that stretched their brains a little. Some books might even do both.
That was today's literary rant.
