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No, the authority said so. The OED regularly updates words and definitions in the dictionary based on colloquial usage. Literally also means figuratively according tho the oldest and most respected dictionary of the English language.
https://www.oxfordlearnersdictionaries.com/us/definition/american_english/literally
The OED is, again, descriptive. They observe the change in meaning and update their description accordingly.
Correct. You’ve just described how the language you’re using has come to be. It evolves over time, and the OED is the most respected documenter of that change. We don’t use the same English that was standard a century ago. Wheat is colloquial now is the standard.