I'm currently doing an MA in Creative Writing and I'm writing my academic dissertation on Steampunk. Specifically, on the cyborg-type horror elements, the fusion of man and machine.
Of course, 'Frankenstein' would probably be the first novel in this area. I can think of a lot of films that deal with this theme, but am racking my brains for examples in literature. Any suggestions?
I am not sure if this reply is too late to be of any use, but read the short story The House of Gears by Jonathan L. Howard (you can find it online at Fantasy Magazine). There is a grotesque little man (Samhet) in that story, one of the main characters, that fits the description "living steampunk monstrosity" perfectly. Not only has he deformed his body, his mind doesn't fare any better.
You said literature and not film, so mentioning Darth Vader isn't helpful - but it's worth noting that Obi Wan's condemnation of him in A New Hope is not "he's a mass-murdering psychopath," but "he is more machine than man now."
And that links in my head, in an odd way, with a line from C.S. Lewis - "when you meet anything that ought to be Human and isn't, you keep your eyes on it and feel for your hatchet." I think Vader hits exactly that chord in the human psyche, as do the animals of Dr. Moreau and as does Frankenstein's monster (though there's no literal machine involved in either of those that I recall). A lot of Victorian gothic fiction derives its horror from things that are in-between, hard to categorize - neither man nor monster, neither man nor beast, more machine than man, things that should be human and aren't - and a lot of our modern conceptions of horror (certainly the steampunk movement's conceptions of horror) come from the Victorians. (I *cough* wrote my undergrad thesis on monsters in the Victorian novel, so I can go on about this at some length if given half a chance. :) )
Let's see, literature - Tolkien hit both of these point separately, with the created Uruk-hai and with the mechanization of war, but I don't remember any point where he fused a man and a machine. Though maybe the Uruk-hai are close enough, if Frankenstein's monster is. More recently, Soulless, book one of Gail Carriger's Parasol Protectorate, dealt with mechanized golems. And Ann and Jeff Vandermeer have put out two anthologies of steampunk short stories - the first at least was heavily weighted toward classic ones, and there was a LOT of really upsetting human-machine fusions in those. Maybe that's fertile exploration ground for your dissertation?
This may not be steampunk, but I would at least mention 2001: Space Odyssey because of HAL's movement toward independent intelligence. It was a novel by Arthur C. Clarke before it was a film.
wikipedia's entry for Cyborg includes a number of entries (including an Edgar Allen Poe piece from 1843) which explore man/machine themes.
After posting I realize I missed the 2011 date and thought this was current, but will leave the post up FWIW.
We are the Borg. We will add your biological and technological distinctiveness to our own. Your culture will adapt to service us. Resistance is futile.
Metal Gear Solid 4 and Metal Gear Rising have to do with this, although they're more cyberpunk. Neouromancer too! Cyberpunk I believe has a lot more body horror in it. Most of the time, it's cleaner. You could always use this as an example of history as steampunk did originate from cyberpunk, at least the modern stories.