I forgot to add the explanation of what goes on behind the scenes of LiterallyCanvas. This is stuff from what I could gather by reading the code. Steve, correct me if I am wrong (I believe you are the most informed person so far!)
When you draw a shape, the drawing happens in the canvas' context (ctx). There is also a buffer context (bufferCtx). I inspected the context properties of both canvas and buffer, and I found that the LineCap and LineJoin properties differ between the two. The miter LineJoin is causing all the jaggedness, and there is no place in the code that makes the bufferCtx properties follow the ctx properties. That is why I placed the hack (described in my prior message) to force the LineCap and LineJoin to "round" - across all contexts.
Now I'm no Coffee script developer, but I would be glad to merge my code with the main repository, or have any volunteer maintainer merge it - basically just those two lines above.
-- Saumil