The story does have some basis in history. The Hudson River Valley in the late 1700s had a lot Hessian soldiers leftover from the Revolutionary War. They were hired by the British to help squash the revolution.
THey were told to be ruthless and incredible sharpshooters and horseman. The area was predominately Dutch and they did not care for the Hessians and often told terrifying stories of their ruthlessness and cruelty. At one point a headless Hessian was found and buried near hte old Dutch Burying ground.
Ichabod Crane did indeed exist. He was a Military Man who served in the War of 1812, Washing Irving met this man @ Fort Pike in Sackett's Harbor, NY in 1814 and was inspired by the name and the man's character (although, obviously he was nothing like the schoolteacher in the story.
The mannerisms, behavior, and job of Irving's character were inspired by a teacher friend of his from Kinderhook NY. He was originally from Connecticut.
THe town of Sleepy Hollow didn't actually exist until 1996, the original town in the book was supposedly fashioned after Kinderhook, NY. North of Tarrytown. In 1996 they 'broke' off a portion of Northern Tarrytown and named it "Sleepy Hollow". I can imagine it was *GREAT* for tourism.