Hi ixchup! And welcome!
I agree with you about the schism that seemed to occur in the fandom's fanfic community, and think that it's a shame. That's not to say that there aren't some phenomenal writers at places like Terra Firma, or that they aren't writing some incredible 'literature'. Pulling the first name that comes to mind (which is to say that I don't want to overlook anyone), Sunshine has written some stupendous stories. She has done some stream of consciousness stuff that carries the reader straight into the character's mind, and leaves you gasping at both the vision created and the beauty of the prose.
What I admire about the writers who prefer Live Journal as a vehicle for posting and sharing stories is the "collegial" atmosphere there. Most of the writers at TF use betareaders, but there isn't the sense of the entire community being involved in a writer's work, or contributing to each other's efforts. I think that is due, in part, to the nature of the two different methods of online communication. LJ has the Friends Lists, so a writer can choose who can or cannot see a work in progress. A forum is much more limited in that respect, which means that if a writer opens up a work in progress to public commentary, almost too many people can view it.
I think it has more to do with the people in each group, though. TF tried the Storyboard, where people could critique works in progress, and it died pretty quickly due to lack of participation. That speaks more to the type of writers' community present at the forum. I'm not being critical. It is what it is. I simply admire the group dynamic that exists among the LJ writers, and wish we could infuse the 'story tellers' at TF with the same variety of enthusiasm.
Changing gears, the 'story telling' versus 'art' issue is one that strikes close to my heart because for me, it is very much about finding my 'voice'. When I first started writing fanfiction, I would look at the writers who were turning out beautifully crafted works of art (Maayan springs to mind) and get tackled by horrendous bouts of inadequacy. Reading some of those other stories could bring my own writing to an abrupt, total, screeching halt because I could not envision myself ever learning to write that well.
Then I made a very important discovery. All I wanted to be able to do is "tell a good yarn". I came up with that phrase during a trip to England in the summer of 2002. I stayed with a friend who was fascinated by the fact that I had begun to write (even though she didn't understand the fanfiction aspect of it, which is understandable since she doesn't own a television). One evening she handed me a book about a young man living on the southwest coast of England in the 19th century, who runs afoul of smugglers and brigands and the like. She thought I might enjoy the story because it takes place where I was staying at the time. I found something else there: a good yarn, and the answer to a quandry about my writing that had been bothering me since I wrote 'Yeti'.
The experts say: Write what you know. More importantly, a writer should write what they enjoy, and I enjoy a good yarn. It doesn't have to be a rollicking adventure with mayhem and gunfire. (Although those are always fun, too!) But I'll almost certainly never turn out high art or the next great American novel for the simple reason that I do not aspire to write that kind of literature. Coming to that realization wasn't a simple matter. It took time, effort, and thought. But in the end, I found what might be the most important thing a writer needs to find. My voice.