CNN:
Scott said he deliberately chose a time of anxious truce between the Second and Third Crusades, a period when Christians controlled Jerusalem under dying leper King Baldwin IV, who ruled it as an open city for those of all faiths.

Muslims were rallied behind the wise general Saladin, whose restraint and diplomatic savvy maintained the relative tranquility between Arabs and Christians.

http://www.canmag.com/news/4/3/1150
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But how much of the story of Kingdom of Heaven is actual historical fact? Even when we are entertained, we’re always curious—“Did that really happen?” As the author of the upcoming novel, Richard and Saladin, my research has given me an intimate familiarity with this period. As I sort out fact from fiction, I am not trying to be derogatory about the film. I agree with Liam Neeson, one of the stars of the movie, who observed that sometimes a greater truth emerges from artistic license. My aim here is simply to answer the question—“Did that really happen?”—without making any other judgments.

The greatest deviations from the historical record revolve around three characters. These are their actual stories:

Kingdom of Heaven: The Characters

Balian of Ibelin: Balian of Ibelin did oversee the defense of Jerusalem, and was the Christian leader who surrendered Jerusalem to Saladin in October of 1187. But he did not come from Europe in 1184. He was older than the character depicted in the movie. His family had lived in “Outremer” (the French term for the areas “outside of Europe” in the Holy Land) for multiple generations, and was part of a Christian faction favoring peaceful relations with Muslims.

Balian’s presence in Jerusalem at the time of Saladin’s siege was a convergence of circumstances, not a calculated choice. As Saladin consolidated his capture of the coastal city of Ascalon, and prepared to turn inland toward Jerusalem, Balian contacted Saladin asking for safe conduct to Jerusalem. He wanted to take his wife and children out of the city to Tyre. Saladin knew Jerusalem was devoid of competent military leadership. His advisers warned him not to grant Balian’s request as Balian was a knight, competent to lead the defense of Jerusalem. Saladin allowed Balian safe passage to Jerusalem, but only after Balian swore an oath to stay in Jerusalem for no more than one night. By Balian’s account, when he arrived, the people demanded he command the defense of the city, and refused to let him leave. He asked Saladin for permission to violate his oath. Not only did Saladin release Balian from his oath, but sent a squad of soldiers to escort Balian’s wife and children out of Jerusalem to Tyre.

It is true that in the course of Balian’s defense of the city he conferred knighthood on every possible Christian male resident, out of desperation. Saladin enjoyed overwhelming military superiority because of the destruction of most of the Christian army about three months before at the Battle of Hattin. Before leaving Ascalon, Saladin offered the Christian leaders in Jerusalem a generous proposition. They would be allowed to hunt and forage in the area until the following Pentecost, unmolested by Saladin’s troops. In exchange, the Christians would agree to surrender peacefully if by that time no rescue was coming. The Christians refused any terms. So Saladin vowed to take Jerusalem by storm, as Christians had in 1099.

Saladin was on the verge of keeping that vow when Balian asked for terms. Balian told Saladin that Christians were prepared to massacre all their Muslim prisoners and destroy the Muslim holy places in the city if Saladin insisted on storming Jerusalem. Saladin chose to save lives, Muslim and Christian, rather than keep his vow. The people were to ransom themselves to avoid slavery. When wealthy Christians left the city without offering ransom money to help poor refugees who could not pay, Saladin released many of the poor Christians without collecting their ransoms. So though Balian’s role in the peaceful surrender of Jerusalem was laudable, achievable by Balian’s skilled diplomacy and reputation with Saladin as an honorable Christian, it was not as achieved as the result of a stalemate.

Queen Sibylla: Queen Sibylla married Guy of Lusignan in 1180. Nobles of that time considered that as a probable future Queen of Jerusalem, she had married beneath her. She stayed married to Guy until her death during the siege of Acre, a few years after the events in “Kingdom of Heaven.” There is no record of any romance between Sibylla and Balian.

Guy of Lusignan: Guy of Lusignan became King of Jerusalem, but not in the way depicted in the film. Kingdom of Heaven begins in 1184. Baldwin IV (the leper king), depicted as king almost up to the capture of Jerusalem by Saladin, actually died in 1185. He was succeeded by Baldwin V, Baldwin IV’s young nephew. The regent appointed was Raymond of Tripoli, another one of the peaceful faction of Christians in Outremer. Raymond negotiated a four-year truce with Saladin. In 1186, after Baldwin V died at the age of nine, Guy took the throne in 1186, through some complicated and duplicitous maneuvering. Guy’s claim to the throne was asserted through his wife.

The chronicles from the period show Guy to be a weak-willed, vacillating leader, not competent to handle the challenges of his position. Just before the Battle of Hattin (portrayed in “Kingdom of Heaven,” though not named specifically), Guy was at first persuaded not to move out from the Christian fortresses to contest Saladin’s siege of Tiberias. But Reynald of Chatillon and the Master of the Knights Templar persuaded Guy that he must meet the provocation or be considered an ineffectual coward. So Guy ordered the march to Tiberias, without adequate water sources, and the Christian army was utterly destroyed in the trap Saladin set at the Battle of Hattin on July 4, 1187.

Guy was taken into custody, and held by Saladin for a year. He eventually began a siege at Acre which culminated when Richard the Lionheart arrived from England to finalize the capture of the coastal fortress by Christians in 1192. But the Christians of Outremer never accepted Guy as a desirable king after the Christian disaster at Hattin. Even though Guy of Lusignan was a vassal of Richard, and Richard initially supported him, Richard realized the Kingdom of Jerusalem needed a stronger king. Richard agreed not to contest Conrad of Montferrat as King of Jerusalem, and Guy and his family were given Cyprus, where they ruled for another 300 years.