I think what's being said is that the OT, much like the NT was largely comprised of writing down oral traditions. I believe the authors of the books were not necessarily the original storytellers so much as perhaps the ones with the literary skills for writing. No, I wasn't there, but we know enough about the traditions of those times to make what could be considered an educated guess. That's the best we're ever going to get, I'm afraid. Until we master the art of time travel, we'll never know exactly how it came to pass, we have enough trouble recounting with any accuracy things that happened in our own country a hundred years ago.
There was disease, famine, theft, fighting, and the more educted scribes and priests of the time found it necessary to give people a way to understand how to prepare food in a way that would not make them sick, not to eat things that weren't good for them, make them understand why they shouldn't hold grudges against their fellows, shouldn't steal, cheat, lie, should work to support themselves, not have sex with close realtives, and the like. I think the Bible neither proves nor disproves the existance of God, but gives some practical advice for living if you can weed it out from amid the stories. If God exists, one could see it as a way to bring honour to your heavenly father to do what is good and follow His advice, but if you don't believe it was inspired by God there is still much there that is useful. I don't like to throw out the baby with the bathwater, but I find a lot in the Bible that is of no practical use to me personally. Yet there is some that is. There is absolutely NO PROBLEM with reading with discernment a book that was neither written by one author, nor even during one time period! Just because a small group of fundies believe you have to doesn't make it so.
There is also no problem with taking as allegory stories that were written as such. If it is made clear in the NT as blatantly "Here is a parable...", then I don't see it as much of a stretch to assume that that was a commonly accepted style of communicating an idea of that time. Perhaps is was the style even before that, as in when the OT was written, things changed much slower back then. We must remember how few people were actually able to read and write back then, so most stories HAD to be orally passed on. We've all played whisper-down-the-line, we know how that works.
To assert that the Truth has not been reported perfectly doesn't mean that there is no truth to be told, only that it was told by imperfect human beings for reasons now unknown to us. As with any religous text I have read, there is a story of a God, a Messiah, a corrupt people who needed to learn a better way. These premises are universal and therefore give me some question as to the Truth of religous (moral) principles. I believe we all have an innate desire to do good, but before we can we must know what it is. Was this desire implanted by God? Do others creatures who walk the Earth have it? Does it really exist or do we just want to believe it does?
I have a difficult time going the nihilistic route and believing we were formed from nothing, going nowhere, have no purpose. I cite as evidence the exquisite mechanics of our bodies, how all the creatures on Earth form a food chain, the chemical balance of the planet, the mathematical beauty of the rotation of the plantes around the sun, galaxy, etc. This all appears to form a pattern and I can't wrap my mind around the concept that it is for no reason. Perhaps man's concept of God is infantile at best, but that still doesn't make me a complete non-believer. Sure, I'm non-believer if you ask me if I take the Bible literally and follow it's teachings, but I love many of the teachings of Christ (as they have been reported) and his valiant attempt to restore our focus to one of peace. Jesus called us to give away our possessions and dedicate our lives to the well being of others. It's hard to find fault with that. He bade us to forgive each other our transgressions, feed each other, share our good fortune, and comfort each other. Sure, I can pick out inconsistancies in the book other people wrote about him, but I'd rather look at how he lived, what he was doing, why he claimed to do it, and what happened as the result. I don't have to believe his mother was a virgin to respect greatly what he dedicated himself to doing. I don't have to believe Barney is real to believe there were dinosuars either.