Very ingenious puzzle! I thought the &lit was pretty dazzling, myself. Consider that in the usual "Misprints" type of clue, there is a misprint specifically in the definition and not in the wordplay, and that's the kind of clue we have in this puzzle.
The essence of the &lit type of clue is that the entire clue can be read as the definition, and the same entire clue can be read as the wordplay.
So if you're going to have an &lit clue that also uses the misprints device, you have to work it out so that the entire clue can be read as the definiton WITH a misprint, and the same entire clue can be read as the wordplay WITHOUT a misprint.
It's really tough to make a clue work in that way. I've constructed a few puzzles using the Misprints device, and I have tried a few times to make a promising looking clue work as an &lit, but I've never been able to pull it off satisfactorily, and in the end I've always given up on the &lit part and just written a regular two-part Misprints-type clue.
But this clue pulls off the trick of being &lit while at the same time following the Misprints device scrupulously, and on top of that it does so very elegantly and concisely. It's a beautiful clue.