Berk, it isn't just the oldest English stories, King Arthur, Heracles, Moses, Buddha, Mohamed, Ramses (cross genre fan-fic), Gilgamesh or pretty much any other example from extant literature from the Enuma Elish onward. Fan Fiction is the catalyst that often takes reality and makes it into legend, myth or religion. A small, in some cases very small dollop of historical fact and then a whole bunch of after market modification by 'fans'. There was even Jesus Slash fiction (secret Mark) and the shark jumping 'young Jesus chronicles' The Infant Gospels, and the favorite villain redemption fan-fic (The Gospel of Judas where he is the best buddy and most trusted disciple) and of course the author insert fan-fic; pretty much all the non-pseudepigraphical Pauline letters.
How fan-fic works in 'traditional lit' is exactly how it works in the literature of myth, legend and religion.
How fan-fic works in 'traditional lit' is exactly how it works in the literature of myth, legend and religion.