This is a very interesting question to consider. Certainly this work marks Coleridge as a critic of similar powers and analysis to his predecessors in English literature, such as Sidney, Dryden and Johnson. The Biographia Literaria in particular is to be distinguished through the way it explores and analyses poetry in the Romantic age, the context in which it is based. As such, it explores such concepts as the difference between imagination and fancy, passion and will and critically assesses Wordsworth's ideas of poetry before exploring Romantic poetry itself. In addition, it looks back at poetry before, discussing and assessing relative merits and strengths. Note, for example, the following comment:
One great great distinction I appeared to myself to see plainly, between even the characteristic faults of our elder poets and the false beauties of the moderns. In the former, from Donne to Cowley, we find the most fantastic out-of-the-way thoughts, but in the most pure and genuine mother English; in the latter, the most obvious thoughts, in language the most fantastic and arbitrary... The one sacrificed the heart to the head, the other both heart and head to point and drapery.
Thus this work clearly is an accomplished piece of criticism that attempts to define the literature of its age and place it in context with works that came before. However, it is uncertain whether it represents a "new high watermark" in literary criticism. That would suggest that this work is in some way superior to or better than preceeding works of literary criticism. What it does, it does well, in terms of mapping out the literature of its age, but critics equally pay attention to the rather abstruse and unhelpful distinctions Coleridge seems to make, which are very difficult and in some places lacking in sufficient examples. Some sections of this work that have been thus criticised are Coleridge's insistence on the division between poem and poetry and the exploration of what is actually ment by primary and secondary imagination. Thus it is difficult, arguably, to claim that this work represents an improvement on what came before in terms of literary criticism. It stands as one of the classics in literary criticism, but whether it stands out as the best is debatable.