Dear Edwin,
In the Gauḍīya Vaiṣṇava tradition there is an allowance to move from the primary meaning to a secondary (non-literal) meaning when the primary makes no sense; in this regard they follow Kāvya, especially well known texts like Mammaṭabhaṭṭa's Kāvyaprakāśa. For discussion, see Jīva Gosvāmin's auto-commentary on his Tattvasandarbha called the Sarvasaṃvādinī (p.25 ff. of Hari Dāsa Śāstrī's edition). Viśvanātha Cakravartin goes so far as to say that the Bhāgavata Purāṇa was composed according to three types of meaning (e.g. vācya, lakṣya and vyaṅgya, the latter two being "non-literal") in his Sārārthadarśinī 1.1.1 (p.53 of Kṛṣṇa Śaṅkara Śāstrī's edition).
I've got an article called, "When Stones Float and Mud Speaks," which examines Jīva's views on śrūti passages that should be understood non-literally; it will be out in the J of Hindu Studies in a few months.
Re Vallabha: He only alludes to the three types of language, bhāṣā, in the 4th maṅgala of his Bhāgavata Purāṇa commentary (p.65 of Kṛṣṇa Śaṅkara Śāstrī's edition), promising to show how they appear throughout the text. A more full examination is in his Tattvāthadīpanibandha, especially verses 11-12.