I've recently been considering a story idea involving me completely butchering Arthurian legend, and it has me thinking.

We know, from Chocolate Frog cards, that many people who we consider legendary or mythological figures exist in this world. Examples are:

Quote Originally Posted by HP Lexicon
Circe (SEER-see)
Circe, in Greek mythology, is a sorceress who lives on an island called Aeaea, near Italy. Circe was able to turn people into beasts. (web link)

Cliodna (CLEEV-nah)
Celtic Irish goddess of beauty, the eldest daughter of the last Druid of Ireland.

Grunnion, Alberic
Could possibly be in recognition of 'Alberich,' a powerful wizard from "Song of the Nibelungen." The poem is mythical, but was the basis for Wagner's Ring Cycle. In Wagner's version, Alberich makes a ring from gold that he has found and places a curse on it against its thief! Interestingly, one of the prizes given to a 'hero' of the Ring Cycle is an Invisibility Cloak. (contributed by Adrian Allum)

Hengist of Woodcroft
Hengist was a Saxon King of Britain shortly before King Arthur's time, who helped King Vortigern defeat Scot and Pict rebels. Later, he led a rebellion of his own, and eventually founded the county of Kent. Quite what this has to do with wizardry, I don't know, but David Colbert offers a similar suggestion in his book, "The Magical Worlds of Harry Potter." (contributed by Adrian Allum)

Wizard, famous for his role in the King Arthur chronicles. Tutored the young Arthur before he knew who he was and what role he was to play in history.

The famous Witch Morgana, like Merlyn, figures into the King Arthur legend. According to the legend, Morgan le Fay, or Morgana, was the witch in the castle that Wart and Kay encountered with Robin Wood (Robin Hood for the unenlightened), Maid Marian, Little John, and the merry men to rescue Friar Tuck, the Dog Boy, and an old man named Wat. Morgana was the child of the Duke of Cornwall and Igraine, the woman Uther Pendragon seduced to have Arthur. (contributed by William Givens)
How do you think these figure in? We can assume that at the times of these people, magic was more accepted than today. Were these legends and myths merely Muggle interpretations of events, or wizarding inventions to keep Muggles from suspecting the truth?

I'm curious as to how all of you interpret this.