I personally believe that this is wonderful idea, especially for documentation and tutorials. Actually after discovering it I changed the way of writing comments.

Compared to RDoc - it's different, RDoc is like a telephone dictionary - You need a phone, look there, got it and closed it, there's no stories there. Literate Programming otherwise allows You to tell a story using words and code, so in this respect it's a different.
So, i believe RDoc and Literate Programming aren't compete, it's different tools with different purposes.

For example, a simple tutorial featuring Virtual File System for Ruby (single united API for accessing Local FS, AWS S3, SFTP, กฤ) written using Literate Programming approach.
I personally like it more than RDoc.