Re: Four L's
From what I believe of human nature, and what I feel of divinity, the book is most likely a great embellishment of the details. On top of that, what most know of the book is through the translated version, as it was not originally written in english (as far as I am aware). The translators were naturally biased towards their own interpretation, which is going to corrupt it even beyond what was originally written.
I do not believe him, if he did so exist, to have been either a Lord, Liar, or Lunatic. As far as being a "Legend", however, I am unable to answer.
Quoting you, it would be a legend "if you think any part of the Christian story isn't true or is unbelievable". If I absolutely do not trust the source as genuine, whether the words themselves are believable is irrelevant; the source mars the credibility.
Now let us move on to the nature of your pastor's "challenge". I believe you are using Legend as far too grand a blanket term. Using that definition, even Liar and Lunatic would fall under the definition of "Legend", as I do not believe the book itself paints him as either.
The challenge is basically "Do you believe? Or do you not?" with small, minor possibilities alluded to in order to present the illusion of freedom within the question as well as to further include those with reservations in the "I believe" group. If it were a multiple choice question, it would be...
Do you believe he existed?
Yes, but with major issues
Yes, but with minor issues