Two ideas for this.

VERSION 1

Start with a legend.  Read it as a group.  Make the telling of the tale fun.  Can be something a player made up, something from a game book, or something from real-world mythology -- the Iliad, the Bible, an Iroquois creation tale, whatever.

Then, roleplay what actually happened that then became known as this legend.  Mechanics would influence extent and direction of deviation from the legend, guiding and inspiring character play, with emergent situations in turn inspiring subsequent scene framing.

What will we discover about our beloved legends?  (Examples: Will the legend's heroes turn out to have been opportunists?  Will the legend's villains turn out to have merely been on the wrong side of the P.R. war?)

VERSION 2

Make a situation for legendary action, make characters who care about (either seeking or shunning) fame and glory.

Begin character play.  Accomplish something worthy of a tale.

Resolve how that history will wind up repeated ages later.  Mechanics would influence extent and direction of deviation from what really happened.  Agents in the fiction could factor into this -- if we know who the winners are, we know they write the history books...

Resume character play.  Cycle repeats, generating two stories that weave around each other. 

The real events conclude, and then we find out in the final piece of legend what moral or point will be attached to them.  What eternal stature will come to our beloved characters?  (Examples: Will it be an isightful tribute to the truth, or an ironic travesty of it?  Will good souls be known as villains, and opportunists be cast as noble?)

That's all I have so far.

It sounds ripe for comedy gold. The first version sounds as though it would be much more dependent on good players being as creative as possible within the framework of the legend.
The second sounds like you need a mechanism in place to rate the 'remember-ability' of characters or events. Game happens, values get assigned as you go, out pops what gets remembered generations later. Maybe something players can spend as well to influence the final outcome, artificially bolstering or reducing something that happened's remember-ability?

Ooh, neat idea!  I like that.

I'm running a fantasy game where the PCs are always creating banners and setting off fireworks displays when they beat a dungeon, just to bolster their rep and name recognition. These could all be Memorability Boosts.  Encourages some narcissistic characters.  Funny indeed.

I do want the option to play this without comedy, though.

As for spending to influence the outcome, maybe each player could control a different facet of culture that contributes to the ultimate legend.  Like, I get "the religious authority", Fred gets "the government", Bob gets "bards", John gets "scholars".  So I can spend for a Memorability Boost on the grounds of something like Holy or Blasphemous, while Fred could do Patriotic or Seditious, etc.

This would be most fun if you had some vested interest in advocating for memorability of each other's characters, but also a vested interest in knocking each other's characters out of history too.  Like maybe the better the overall legend's Memorability Score, the better your guy can be, but the lower your guy is on the character pecking order, the worse off he winds up.  So you want to give points to the guys in last place, usually.  Which creates a cool "vying to be The Hero" thing, which might rock.

This is actually very similar to where I've been heading with my Brigaki Djili project.

It'a a game of communal storytelling, where the players engage the roles of oracles, the GM takes on the role of a traveller who has come to find out the truth regarding an ancient tale. The GM may only ask questions...they may not describe anything. The players follow a set of ritual rules to unveil the story.

Each player channels a specific avatar from the story, but each player is also able to set the scenes for the other avatars. If the story deviates too far from the "known" history, difficulties rise, but that doesn't mean that the story has to follow the traditionally accepted version of events.

V 

Dude!  Have you played this yet?  What does the name mean?  Do you have a rules doc about?

Brigaki Djili is a romani term for "Sorrow Songs", they are traditional gypsy tales about morality and loss.

It's taking a while for me to write, because I'm writing it in the form of a 1890's anthropology text...Imagine the kind of thing that Robert L. Ripley might have seen in his local library as a kid...the kind of text that might have inspired him to travel the word in search of tales and truths of his own.

It's been playtested a couple of times, and it seems to be working so far, but it'd be great to get someone else's feedback on it. I'll try to get a publicly consumable version available shortly. 

Oops..PS.

Here's a link to an earlier thread about the project.

And some further thoughts here.