This is actually a few different questions rolled into one! Specifically, how accurately do we know anything at all about Saladin? And, underneath all that, how do we know if anything in the movie is accurate or not?
I don’t want to run up against the 20-year rule, since the movie was released only 15 years ago, but I think it’s relevant to see what some historians of the crusades thought about it. Some historians hated it so much that I’m honestly not sure we watched the same movie. Christopher Tyerman said it has
“fundamental, meretricious historical errors…attracting the fury of Muslim activists and right-wing Christians alike.” (Tyerman, pg. 235)
Jonathan Riley-Smith may have hated the movie more than anyone; in his Times review (“Truth is the first victim”) and in his book The Crusades, Christianity, and Islam, he says that Saladin is depicted as someone who wants tolerance and peace but is forced to fight by barbaric and stupid crusaders. He felt the movie was the worst thing for Christian-Muslim relations since 9/11 and was essentially propaganda for Osama bin Laden.
Some have been more favourable or neutral:
“Comfortably the most high-profile exposure for Saladin was in Ridley Scott’s movie Kingdom of Heaven (2005), an international blockbuster shown across the western world and presented to great acclaim in the Near East too. In the wake of 9/11, this was a determined effort to tone down the religious rhetoric in its depiction of the crusades and to massage them into a chivalric enterprise. Saladin was played with great poise by the Syrian actor Ghassan Massoud, who described the sultan as a Muslim hero ‘who returned to Arabs and Muslims their pride and dignity, an example for our people, our leaders, our society’.” (Phillips, pg. 3)
Massoud has also been described as giving Saladin
“an enigmatic cool.” (Cobb, pg. 5)”
John Hosler gives a specific example of Saladin and his brother discussing whether or not execute some crusader prisoners in 1183. His brother wanted to consult legal experts, but
Saladin responded: “the judgment of God on men like these is not a problem for scholars nor is it obscure. Let the decision to kill them be carried out.” Such an attitude belies the popular modern view of the sultan as a gentler, more tolerant sort of leader (Hosler, pg. 154-55)
So, some historians hate it a lot, and some, well, I don’t know if they like it, but they don’t hate it as strongly! But no one thinks the movie is very historically accurate in general, and no one thinks it’s very accurate about Saladin specifically.
Secondly, how do we really know what is accurate about Saladin’s life and what is not? There are lots of sources about his life, written by people who knew him personally and lived at the same time. Are they accurate? For example, Baha ad-Din Ibn Shaddad knew Saladin and wrote a biography portraying him as extremely pious, someone who always performed his daily prayers, and who was so generous that when he died he left an empty treasury. But are these accurate statements, or did Baha ad-Din have to describe him this way because that’s what his audience expected? Literary biographies of Muslim princes required these types of descriptions.
Thirdly, the movie (sometimes) follows its sources very closely. Some things are made up - King Baldwin didn’t wear a mask, Guy of Lusignan wasn’t a Templar, Balian was a real person but he wasn’t a random blacksmith from France, etc etc. Some things are portrayed almost exactly the same as you’d find them in a history book - specifically, Steven Runciman’s History of the Crusades, which the screenwriter used as a source (if I remember correctly, he says so directly on the DVD commentary track). The siege of Jerusalem and Balian’s negotiations with Saladin are pretty much exactly how Runciman described them.
There’s some modern imagination in there too. We’ll never know what Balian and Saladin actually said to each other during the negotiations. Did Jerusalem mean “nothing” and “everything” to Saladin? It probably meant quite a lot to him. At the end of the movie he picks up a cross that had fallen over and sets it back on an altar - would he really have done that? His men tore down the cross on the Dome of the Rock and dragged it through the streets after they took Jerusalem. He did let the Christians of Jerusalem leave, but after the Battle of Hattin earlier in the year, he happily watched prisoners being executed. Later during the Third Crusade, both he and King Richard executed more prisoners.
I’m sure we could go through every little scene and figure out whether it’s accurate or not, and Saladin isn’t even really in the movie that much so it should be easy enough, but the point is it’s “accurate” in the sense that it follows 19th- and 20th-century historians’ ideas about Saladin. It focuses on some of the good things that medieval and modern historians have said about him, and ignores all the negative stuff. But the problem is we can’t really ever know what any medieval person was really like, including Saladin.
Sources:
Christopher Tyerman, The Debate on the Crusades (Manchester University Press, 2011)
Jonathan Riley-Smith, The Crusades, Christianity, and Islam (Columbia University Press, 2008)
Jonathan Phillips, The Life and Legend of the Sultan Saladin (Yale University Press, 2019)
Paul M. Cobb, The Race for Paradise: an Islamic History of the Crusades (Oxford University Press, 2014)
John D. Hosler, The Siege of Acre, 1189-1191 (Yale University Press, 2018)