So is there a better way to remove the myth? What are the options?
1) Stick to history. Demythologizing is about keeping it real. History is pretty real. The history, though, has been tampered with. And limiting yourself to just the pali cannon is a type of fundamentalism that you wouldn’t expect to see among the sort of people who would reject myth.
2) Re-map existing models. For example, we could take something missing in Buddhism, like a progressive view on economics. As far as a I could tell, the Buddha didn’t think much about economics, not in Adam Smith style nor Marx style. So if the myth is missing economics, we could map concepts from Marx or Adam Smith onto ancient myths. But this is all rather cumbersome. The historical Buddha didn’t think much about economics other than he realized that there was a way for the sangha to exist if part of the economic became a gift economy (dana for merit). He didn’t *really* have anything to say about free markets or alienation or exploitation or capital. Maybe it would make more sense to just have a copy of your favorite economists works next to your sutras.
3) Make new myths. I think this is the best option of all, but who wants to be the first to consciously put new words into the mouth of the Buddha? I saw a lecture where a scholar said some of the Mahayana writers said they got their material from meditative visions. A demythologizing author, would probably have to just fess up to writing fiction.
4) Salvage. Keep the myths more or less the same, but remove the junk. Like removing the sexist vow from the Medicine Buddha’s 10 vows or replacing it with one that isn’t so misogynistic.