I think the good genre fiction getting shelved outside of the genre is one of the things that contributes to the continuing anti-genre slur from the literati (as I don't want to assume that all of the "establishment" thinks thusly, and will only attribute the thoughts to those elitist anti-genre folks). Obviously, they must say, if it were good enough, it wouldn't be ostracized in a section where people who enjoy it will actually find it! ;)

Of course, Jane Austen, who I've heard claimed is the grandmother of all modern romance, is in literature (or at least general fiction) rather than romance. In her day, I believe she was just intending to write novels (where Hawthorne was, in his market, publishing romances); it's only been a reclamation from the current romance market that feels Austen is appropriately genred. So I guess it can go both ways.

The Chesterton quote is utterly lovely. :)