Hi Tom,

I certainly believe what you describe should be possible, although it
pains me to imagine embedding pure latex code in an Org-mode document
and losing the ability to use the org latex export helpers :), but I
digress.

Org-babel needs to be told to recognize latex source code blocks and how
they should be tangled, which can be accomplished with the following

(org-babel-add-interpreter "latex")
(add-to-list 'org-babel-tangle-langs '("latex" "tex"))

Once that is done `org-babel-tangle' should do the trick.

for example, after evaluating the above I was able to tangle the
following .org file into the following .tex file.