Yeah, well, if you can transcend the genre without betraying it, what could be better? You're right to say the options are not mutually exclusive, but that is a counsel of perfection (and your example is great). But my objection really is to works that are praised for transcending when all they are doing is betraying. Somewhere at the back of my mind is a phrase of Pauline Kael's about musicals for people who don't like musicals, and you and I can both think of plenty of much-praised movies that are made for people who don't like movies.
But of course I can't bring out the big guns against you, because you're not enough of a snob, and you obviously love genres. This is very distressing, or would be if it wasn't such fun. I can try and say what I think the big game is, though, and what I was groping for in my book. What really interests and unsettles me in horror movies and novels, and in some other forms of fantasy, is the naked idea of magic: the thought that I could alter the world simply by wishing it altered, that nothing other than the wish, or the magic word or gift, is necessary. There are lots of harmless forms of this thought, but the implied image of power is really terrifying. Realistic fiction always avoids this effect, of course, and that is its glory. What Henry James called thought and desire always get caught up the snags of the world, no magical through-route to completion. But then fantasy has a kind of scary glory too--the picture of a world that doesn't resist us, but caves in to our wishes with sickening willingness. Wishes are still escapism in such a picture, but the place we escape to is a grisly model of our mind. Hmm, overwriting or what.