Duane Smith is extending our discussion concerning literacy with a great post on the relationship of the language of the Amarna correspondence with that of Hebrew.  It is a really good post that you’ll want to take a look at.  I’ll try to give my response to it later, but now I only have time to mention that I would not say that “Classical Biblical Hebrew developed out of Late Bronze Age Canaanite.”  I will mention quickly that Stephen A. Kaufman’s article “The Classification of the North West Semitic Dialects of the Biblical Period and Some Implications Thereof” in The Proceedings of the Ninth World Congress of Jewish Studies: Panel Sessions, Hebrew and Aramaic (Jerusalem: Magnes, 1988) 41-57 is helpful as we discuss ancient “languages” and “dialects.”