This is a great question and one that is difficult to grapple with. Too often - even in the discipline of folklore - we separate stories about things that really happened from stories that are clearly false (from our point of view), labeling the latter as legends and embracing the former as historical primary sources, loaded with "facts." This is how I handled this problem in my Introduction to folklore:

There is a widespread legend told by countless families of the ghostly appearance of a loved one in anticipation of news that the individual died. This became a popular tradition in post-Famine Ireland because so many relatives lived in North America or elsewhere. But it is frequently told by all sorts of people internationally. So we can ask, are there real-life, actual inspirations for this legend? That is, do the spirits of the dead actually come to visit loved ones? Well, how the hell should I know? To paraphrase a famous line from the television show “Star Trek,” “Damn it Jim, I’m a folklorist, not a ghost hunter.” And I have no intention of becoming a ghost hunter. It doesn’t matter what is behind stories so much as it does that people tell these stories. I’m in it for that part of the game; I consider stories as they are told over time, to gain from that material some insight into the past, into culture, and into the human condition. I am a folklorist. And with that, my plate is full.

From the historian's point of view, the issue can be seen as more complex, but it needn't be, I suppose. One can, as you say, take sources "at face value, without judgement." It is, perhaps, easy to slip into a patronizing tone, and that is certainly part of the problem, but when dealing with historical forms of folk belief, I try to sidestep the evaluation of the core of the beliefs and simply examine the beliefs themselves, together with the stories that were told. For example, I took on the historical belief that supernatural beings inhabit mines.* I'd have to go back and check, but I don't think I ever felt the need to assert that these entities don't exist. It was enough to discuss what people believed, how those beliefs manifested, and when they faded.

My mentor, Sven S. Liljeblad (1899-2000) told a story about traveling in rural Idaho in the winter of 1942, shortly after Pearl Harbor. He had a Shoshone informant with him and was asking for information about the names of local geographic features in Shoshone. He asked this man about the name of a mountain that they could see, and the informant said he didn't want to say because it was rude to give voice to the name of a mountain in its presence and doing that sort of thing could cause the mountain to seek revenge. Sven persisted and the informant relented. They quickly were stopped by a flat tire. They walked into the nearest town where they were arrested because Sven's thick Swedish accent sounded German to the locals (and Sven was, therefore, suspected of being a spy), and they thought his Shoshone informant might be a Japanese spy. Sven said he never again forced an informant to go against his beliefs, and he acquired a new respect for indigenous belief systems. Now, I'm not absolutely certain Sven's story was true (even if I believe it was!), but I am certain it expressed his reluctance to pass judgement on the beliefs and traditions of other people. I have tried to live by that creed.

Historically, we should always try to find the path that does not force us to step over certain lines, even if we feel that we are in a position to pass judgement on our "lesser." Who is to say, after all, who or what is better?

Edit * to supply source on article on mining: Ronald M. James, “Knockers, Knackers, and Ghosts: Immigrant Folklore in the Western Mines,” Western Folklore Quarterly 51:2 (April 1992).

Aside from /u/itsallfolklore's wonderful response, I will say that in the history of science in particular we are very familiar with what might be called methodological anti-realism. Which is to say, I don't live my personal life like all claims about the world are true — I don't believe in phlogiston, the electromagnetic aether, bodily humours, or ghosts are "real." (Or that vaccines cause autism, to make another sort of point.)

However I can write histories of people who did think these things were real without condescending, labeling them as "wrong," or even worrying about whether their knowledge claims are legitimate to us today or not, because in many cases that does not matter and in fact getting hung up on such things leads to the writing of terrible histories of science.

A history of science in which you pointed out every time Aristotle was wrong about the world, versus the few times he was right, does not enlighten the reader as to what Aristotle's natural philosophical program was. Historians of science tend to adopt an agnosticism when writing about these things because the goal is to better understand the world in which these past historical actors operated, and inserting present-day knowledge (which, the subtle historian might add, is itself not guaranteed to be true, either) doesn't really help that in most cases. (Imagine if I lived in the 19th century, and tried to write about Aristotle's work, and I did it all in terms of the electromagnetic aether. How valuable would that work be?)

This is why a lot of the academic study history of science is often read as "postmodern" — it doesn't care about who was right in an objective sense, only a relative sense if at all (who was able to convince other people of their rightness, and how did they do it?). This does not mean that historians in question are anti-realist (a few, like Paul Feyerabend, may have claimed to be, but none actually live their lives as if all claims to natural knowledge were equally valid or unsettled), just that this approach to the past gets better results than ones that serve as a "judgment from the future," or a "judgment from Those Who Know Better."