I think the difference is internal and has nothing to do with the formula of characters, plot, floridness or sparsity of language, or any isolated techniques. I think of is as the difference between a one night stand and falling in love with someone. One may be exciting, engaging, titillating, momentarily satisfying, but the other changes something deep inside you or makes you want to change something in the world because it is no longer acceptable to you philosophically or ethically. I don't mean in the sense of being saturated by a thousand page argument for self-determinism, etc., but at least a deeper awareness of humanity and the ability of others to feel, suffer, etc.

I think the second kind of writing happens subconsciously, and even in a formulaic story or a book that appears on the outside to satisfy the tastes of a particular group of readers, if the writer's mind and capacity are only able to rise to the level of the surface texture of the story, then that's that; if they are able to rise above the surface and can perceive and paint deeper issues, something that stimulates the readers to challenge their views of life, then that is another.

Maybe "genre" writers are actually better than "literary" writers in regard to pure craft, since that is what they need to fall back on to make their stories work to full effect. My only problem is that a lot of them don't pay enough attention to their prose or write (purposely?) such simplistic prose, or are so bumpy that I can't deal with it. On the other hand, a lot of so-called "literary fiction" is dull, arbitrary, uninspired, has no pace, is self-involved (well, the characters, anyway), and plodding through it is a real nightmare.