There is nothing particularly unusual about Rome's foundation being mytho-historical, that is fairly par the course for cities whose foundation predate their literary record. For a couple well known examples, Athens had a foundation myth centered around the contest between Poseidon and Athena, and Jerusalem had a sort of mythological foundation with its conquest by David and refoundation as an Israelite city, and Carthage's foundation by Dido.

As for what "really" happened, the most we can say for certain is that its fortunate situation between Campania and North Italy, with ready access to the sea but not so close as to be vulnerable to raiding, led to rapid growth in the early iron age and it becoming the foremost settlement in Latium. Statements beyond that, particularly its relation to the Etruscans (eg was it an Etruscan "colony"? Was the expulsion if the kings also an expulsion of Etruscan domination? Was the expulsion of the kings a historical event?) are simply riddled with controversy.

A good book on this is Origins of Rome. He takes an unusually trusting position on the ancient sources but he is honest about it and gives other perspectives a fair airing.