Yes. "echo echo-literally ; echo-literally foo; bar; baz" being the obvious problem case.

It all gets a bit mucky; because you're explicitly breaking the parse of the command line, you have to make rather arbitrary decisions about whether to be greedy or not, given something like:
echo `echo-literally foo; bar; baz` ; echo `foo bar`
or
echo $(echo-literally foo; bar; baz) $(echo foo; bar; baz)

And worse still, once you've got two of those $(...) constructions on a single line, there's no way for the execution of either one to know which of them is meant. I can't see any possible way to make

echo $(echo-literally a;b;c) $(echo-literally d;e;f)

work at all.