I think that's exactly what is meant, and it's a great example. The two places where literate programming have shined most are 1) documentation because it's a natural fit there and you can get away with having little programs rather than focusing on a book-length narrative as Knuth had originally purposed it for. But also 2) notebook programming environments especially Jupyter and Org mode. I think programs structured in these notebooks really are perfectly situated for LLM analysis and extension, which is where the opportunity lies today.