having a historical basis perhaps in a smaller scale but exaggerated as a “sacred myth”
This is generally how I see it. I think the form - that is, the genre and modes of expression - are important in orienting a reader properly, both theologically and historically.
I think it’s worth noting that, for most of history, the various literary forms (genres, prose vs verse, literary devices, etc.) of the Bible were overlooked by most biblical scholars, Catholic, Protestant and Orthodox.
As an example: it seems fairly instinctive (and somewhat obvious) that we ought to try and read poetry
as poetry, being attentive to what poetry is and isn’t and how poetry works. But that was
very controversial at the start of the 20th century.
In fact, one impetus for the Fundamentalist movement was an insistence that all poetry in the Bible should not and
must not be read as poetry: there was to be no acknowledgement of metaphor and parallelism, because God communicates only propositionally (A = B, do this, believe in that, etc.). The idea that God would communicate meaning via potentially ambiguous and unclear means such as poetry was more-or-less viewed as apostasy.
The revival of Hebrew as a modern language in Israel was
hugely important in creating a dedicated and sustained interest in Hebrew (both ancient and modern) literary criticism. I think we’ve become much more attentive to the ways in which the OT - especially the creation, exodus and founding narratives - conform to and innovate upon literary forms widespread in the ancient Near East.