I think that Chuck Palahniuk was wrong way back then.
I think transgressive fiction is still alive and well.
I think this because what I write, every day, has that very goal: to be transgressive.
But what transgressive aims mean has to be up to the individual author.
So what do I mean when I say transgressive fiction?
What is the use-value of it as a genre?
First, I think this: far too often in narratives, our experience of other ways of seeing our culture is mediated through our protagonist. This is why we have the Scarpettas, the Longmires, the Clarise Starlings: as a viewer/reader, we want to see the abject character, but through a window. Safely ensconced behind bars. Through the eyes of someone who is standing a bit closer than we want to be. Hence Law and Order: SVU. We want the detective Bensons of the world to have to be in the same room as those who move through culture on the less-than-approved paths.
We don't want to have to be close enough to touch them.
What transgressive fiction does (when it's firing on all cylinders) is to bring the reader face to face with protagonists who are varying degrees of different (most often extremely so) from the 9-to-5 worlds we inhabit. No convenient protagonist between us and the abject--they are the protagonist. We are in direct contact with them.
So we don't ride along with the detective who tracks down a man who traffics children in to sexual slavery, instead we see the world through that man's eyes, and come to understand what circumstances might lead him to do what he does. Palahniuk writes about a young man so fed up with the doldrums of living the societally approved life that he invents another life for himself where he is a nihilist and a terrorist (who happens to look like Brad Pitt). Ellis writes about a man whose desire to become a powerful player in business leads him to have to push his violent drives down so far that they erupt in to multiple murders. Cooper removes the metaphor of worshiping body parts by creating characters who actually dismember (and most recently eat) their objects of sexual desire. So on and so on.
No convenient character standing between us and these.
No outside moral compass to keep us from identifying with these monsters.
This is the value of transgressive literature: it forces the reader up against the most terrible of terrible creatures, and then dares them to not empathize, to not understand (which we're trained to do with our protagonists). It's a blush response test in many ways, though even in the case of PKD's brilliant Do Androids Dream of Electric Sheep?, we still have Deckard between us and the androids. What might happen if we had to watch all of it through Batty's eyes?
Second, I think it's this: the violence and sex are not off stage, safely contained for the viewer/reader. The romance novel puts the sex on-stage, but so often uses softening (if you'll pardon the pun) metaphors to make the sex more palatable. Transgressive works have no intention of making what they have to say palatable. Sex and violence are both horrible and often brutal, especially for those that exist on the outside edges of society. Viewers recently got a taste of this when they went to see Fincher's brilliant adaptation of Larson's The Girl with the Dragon Tattoo. The rapes are brutal, and fully on stage. There is no way for the viewer/reader to escape it, or pretend it is anything close to loving or consentual (unfortunately, Lisbeth Salander, one of the most brilliant characters to come along in a while because she is so transgressive, yet exists in a text that is so mainstream, is mediated through lots of other eyes). Whether we like it or not, we are slowly but surely growing callouses that keep us from feeling quite as deeply as we should when it comes to the brutality inflicted on other people in our culture. So sex and violence in transgressive texts often go far in to what some might call excess in order to shock an audience slipping slowly in to apathy. So often, we have to go five miles over the mark to get an audience to move a centimeter.
Ultimately, both things add up to the same thing. Transgressive literature forces the reader/viewer to empathize with characters that they would normally keep at arm's length by refusing to give the audience a helpful mediator through which to experience the encounter with this abjected individual, and by putting the reader/viewer at ground zero, so to speak, of horrifically violent acts. There are perhaps other ways to accomplish this forced empathy, but obviously this is the method I've chosen.