Yeah, that’s a really good way to put it. I don’t ha e the background to speak on whether the “illiterate bard” theory is actually true, but I find the idea that some kinds of literacy could be mutually exclusive totally fascinating.
Many of the pre-Christian European peoples did not have written languages or used them extremely sparingly - oral tradition poetry was how information was stored and communicated. Notice how all of Europe uses mostly Roman letters (the Christians also unfortunately burned most of the existing culture when they converted a population which is also why the Norse legends come mostly from Icelandic, one of the last places to really convert because of its remote location)
Not to mention literacy wasn’t even particularly common in Europe until relatively recently. The work on Homer I’m thinking of (Parry and Lord) is based on oral traditions that were still alive in prewar Yugoslavia.