"Fictionalized history"?

I'm going to briefly examine a potential objection to the historicity of the Bible:

The essential and ineluctable fact is that most of the narrative portions of the Hebrew Bible are organized on literary principles, however intent the authors may have been in conveying an account of national origins and cosmic beginnings and a vision of what the Lord God requires of man. We are repeatedly confronted, that is, with shrewdly defined characters, artfully staged scenes, subtle arrangements of dialogue, artifices of significant analogy, among episodes, recurrent images and motifs and other aspects of narrative that are formally identical with the means of prose fiction as a general mode of verbal art. R. Alter, "How Convention Helps us Read: The Case of the Bible's Annunciation Type-Scene," Prooftexts 3/2 (May 1983), 116. 

[The narrator] feels entirely free, one should remember, to invent interior monologue for  his characters; to ascribe feeling, intention, or motive to them, when he chooses; to supply verbatim dialogue…for occasions when no one but the actors themselves could have had knowledge of exactly what was said. R. Alter, The Art of Biblical Narrative (Basic Books, revised ed., 2011), 40.

This characterization has a lot of prima facie plausibility, because Biblical narrative does, indeed, exhibit these features, and these are features we often associate with fiction. So what are we to make of this?

i) In the second paragraph, he's unpacking the omniscient narrator. And that's a familiar fictional convention. But, of course, that's also consistent with revelation and inspiration. If the Bible is the word of God, then we'd expect Bible narrators to be "omniscient." Obviously, Alter rejects the inspiration of Scripture, but it's striking that he doesn't make allowance for that explanation even for the sake of argument. 

Concerning the first paragraph:

ii) We need to distinguish between history in the raw, and historical writing. A historian who's a skillful narrator will use literary techniques in writing about the past. There will be a somewhat artificial aspect to his presentation, viz. "staged scenes, subtle arrangements of dialogue." Given the necessary selectivity of historical writing, there are many different ways to present the past. 

iii) Just as Alter fails to make allowance for revelation or inspiration with respect to the omniscient narrator, he fails to make allowance for predestination and providence with respect to "artfully staged scenes, subtle arrangements of dialogue, artifices of significant analogy, and recurrent images and motifs." This is how we'd expect events to unfold if the Bible is, indeed, the record of a God who directs events according to a concerted plan. 

iv) In addition, we'd expect this to be more evident in the case of men and women who have a special role to play in God's historical strategy. Their lives would reflect a more conspicuous degree of overt guidance.  

v) Finally, I'm old enough that when I look back over my life at this vantage-point, I recognize similar "fictional" features in my own life. The cumulative effect of subtle "coincidences" that seems to be too convenient to be random. A stark contrast between my lack of foresight or ultimate control, and a controlling intelligence behind-the scenes. 

That's all the more striking, both because this is life in the raw, not a literary record of my life, and also because–unlike major players in Bible history–there's nothing very significant about me or my relatives. Yet I hardly think I'm alone in this. I'm sure many ordinary Christians could testify to the same experience.