I just wrote a very short article about this subject (hey, five pages for me is *dinky*), which unfortunately I can't post to WoU until tomorrow. However, working on it did remind me of a couple of things I wanted to point out:
First, even though we have a name for the author of the Iliad and the Odyssey, we don't really know who this guy was. We know a little about what kind of person he might (and might not) have been, but the tradition of the blind bard singing epic poems to a spellbound audience has been pretty much disproved. The introduction to the Fagles translation has some excellent things to say about this.
Second, it's important not to lump all ancient Greek writers in together. Homer was a very different writer from, say, Euripides or Sophocles, who lived and worked several centuries later, in the classical Greek period (fifth century B.C.E.). Both Homer and the classical Greek writers drew on the riches of Greek mythology for inspiration, but how they used that material is very different. Not all old dead Greek guys are alike!