I think existing incentives are working fine, except of  
  course that I wish more people would discover the 
  advantages of literate programming. 

The problem, is, in my opinion is that programmer believes in the beauty of code itself, and literate didn't allow to write beautiful code easily. It helps to write beautiful documentation. Maybe a tool allowing literate and inverse literate programming to propagate modifications in code or in documentation on both directions may allow a better adoption?