Oral sources can be used but they require their own types of source criticism. The same can and must be said of written sources, by the way. All sources are suspect and should never be taken on face value. Each type of source requires its own spectrum of source criticism. An oral history conducted by a reputable oral historian carries a great deal of weight. A community's collective account of its history may be more suspect, especially the further back in time it extends, but it can be taken as bearing its own unique sort of information. At the very least, that community oral history reflects on how members of the community regard themselves.

John Rule, an excellent British historian, looked at the Cornish collections of folklore for evidence embedded within the stories for traditional festival practices in pre- or early-industrial times. See his essay on the topic in his "Essays in Eighteenth and Nineteenth Century Social History" (Clio Publishing: Southampton, 2006). That's not how I use the same texts - I look at these oral sources as evidence of the stories that were told in the nineteenth century, but the example presented by Rule illustrates that the same oral source can be consulted to tease out insights in more than one way.