It means "awe-inspiring", with "awe" having the meaning you cite ("mixture of wonder and dread"). As noted, it's a literary sense; I'd go so far as to say that it's effectively obsolete (though it may hang on in religious writing, which tends to preserve archaic forms).
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I read this quote in an obituary and had to look up the word "awful" in the phrase "awful grace of *** ". I didn't realize that word was used to mean 'shocking' as this person was young and died suddenly.
This piece of Aeschylus' poem leaves me in 'awe'.
As noted, it is literary word and should be taken in the context of its time.
Again, in contemporary literature, we can take it as poetic license; leaving its meaning fluid and fit for purpose.