It can't hold weight if you're accepting what Kabuto stated. If people are doubting the ability of a particular candidate, or if they've been misinformed with regards to what that person is/was capable of, their assessments are lacking severely in validity. No-one stated Hashirama was the strongest because they thought his power was a myth. Just an old folk tale that seemed too absurd to be true [
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]. That coupled with the idea that the Senju/Uchiha dominance was yet to take a prominent role in Kishimoto's manga. Notice the lack of symbols on the Senju brothers' armour [
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]. That is no longer the case. Hashirama is, at this point, nothing more than a plot device - a man who needed to be portrayed as strong enough to fight Perfect Susano'o, the Kyūbi and the legendary figure of the Uchiha clan, Madara.
Lots of people would've died in these wars. If Hashirama himself succumbed to such battles, then it's likely that a significant number of fodder would've died along with him. His greatest feat was witness-less. And he didn't need to bring the entire Senju clan with him to battle, nor was he likely to have done so. It still follows that many (not all) who witnessed Shodai's power first hand in battle may've died whilst the Senju lineage remained preserved.
I said some of those who witnessed Hashirama fight could've passed away. Not everyone who fought in these wars would've seen Shodai in action, so clearly not everyone from these wars would've died in my scenario. Nothing in the manga even says that Ōnoki witnessed or knew about Hashirama's full strength. He clearly didn't because he knew not of Perfect Susano'o; you'd need to know what Perfect Susano'o is in order to fully grasp the immensity of Hashirama's strength.
Who are the people? Unknown. All that
is known is that
many people were unaware of his true power. '
many' was the word which was canonically used. The word many in itself could mean;
- Being one of a large indefinite number; numerous:
many a child; many another day.
- Amounting to or consisting of a large indefinite number;
many friends.
- The
majority of the people; the masses;
"The many fail, the one succeeds"
It wasn't Hashirama who was considered a myth. It was his
strength that people did not believe in. "Just like they thought the Rikudō Sennin's power was also a fairytale" - Kabuto.