Hiruzen was not at his prime when appointed Hokage and the war era of Senju/Uchiha was over meaning many clans had not seen Hashi full power. Not many have even seen Perfect Susanoo bro. But top tier ninjas know not to mess with them like you said.
Maybe they had not seen his full power but they defiantly had seen the aftermath of such power which created VOTE or seen/heard the battle from afar with the bijuu dama's and such flying about.
The time Gap between Hashirama/Tobirama's death is most likely a few years at best due to hashirama actually knowing tsunade.
By the Time Hiruzen became full on adult Hashi Power was considered fairy tale. It manga fact bro stated by Kabuto himself who made that statement on Hiruzen.
Hiruzen was 69 when he died in part 1 and during part 1 tsunade was 51. Hiruzen is only 18 years older than Tsunade and she looked about what 4/5ish during Hashirama's flash back of her. So lets say tsunade was 5, That makes hiruzen at least 23 while hashirama was alive.
Then maybe a few years later give or take tobirama died, Meaning hiruzen was atleast in his Mid/late 20's maybe early 30's when he became hokage.
Now Hiruzen retired and handed his title over when he was in his 50's i think between 51-53. Now that means at the most he was hokage for 20 odd years before Minato took over. Making his prime between Mid/late 20's and his early 50's
So i'd think it's safe to assume his Prime was between his early 30's to his Early/Mid 40's. Which isn't really that long after Both Hashirama's and Tobirama's death. So again, Unless everyone in the senju that fought along side him and All the uchiha that fought against him and the senju's died in that 20 Years i doubt it reached full fairytail status until many years later.
Now i'm not denying kabuto's statement but it depends on which generation his statement was targeted towards, He was only 24 in part 1, If he was talking about his gen (meaning the current gen the point in time the statement was made) his statement was entirely correct. it was a fairytail to the current living generation who has never witnessed his fight at all nor witnessed first hand the battle scars he left they're just told it in the history books and such.