Christian docrines on this issue vary enormously, but since we're speaking in the context of evangelicals, I will say that most evangelicals subscribe to the doctrines of inspiration and inerrancy. I.e., God supernaturally directed the composition of the Bible, although it's not accurate to say that he dictated it, per se (inspiration); and the Bible, in its original text, is free of mistakes (inerrancy). Most evangelicals, particularly those who hold a more rigorous theological interest, do contextualize the Bible historically - in fact, one of the more important recent movements in evangelical theology is called the New Look on Paul, which essentially insists on a much more historicized conception of that apostle.

Regarding the use of history of de-spiritualize Jesus, well, many have tried to do precisely that. I fear quoting C.S. Lewis ad nauseum, but he has a particularly insightful point about the error of that line of thinking:

"...I am trying here to prevent anyone saying the really foolish thing that people often say about Him: 'I'm ready to accept Jesus as a great moral teacher, but I don't accept His claim to be God.' That is the one thing we must not say. A man who was merely a man and said the sort of things Jesus said would not be a great moral teacher. He would either be a lunatic -- on the level with the man who says he is a poached egg -- or else he would be the Devil of Hell. You must make your choice. Either this man was, and is, the Son of God: or else a madman or something worse. You can shut Him up for a fool, you can spit at Him and kill Him as a demon; or you can fall at His feet and call Him Lord and God. But let us not come with any patronizing nonsense about His being a great human teacher. He has not left that open to us. He did not intend to."

-Lewis, Mere Christianity