Should Beowulf be read as a historical account of the Anglo-Saxon people, or is it too outlandish? Instead, should it be read allegorically as a struggle between good and evil, order and chaos, the visceral and the divine? Or a combination of all of these?

Beowulf itself is not a history, but rather an epic which includes some historical figures. The purpose of blending historical and imaginary information (such as the character of Beowulf and the stories of the monsters) is to create an account of the origins of traditions and values of Anglo-Saxon culture. The genealogy serves that purpose of emphasizing that this is a poem about cultural origins. 
One thing it is very important to understand here is that medieval reading followed a tradition which assumed that all texts could be interpreted on multiple levels simultaneously. Rather than something being a history OR an allegory, it was assumed that any text could be read both literally and allegorically. Every text for a medieval reader had a literal sense, a moral sense, an anagogical (spiritual) sense, and a tropological (relating to symbols of Christ) sense. Where something did not make sense on one level, that was a sign that it should be read on another level.
Thus a medieval reader would see Beowulf's fight with the dragon as perhaps representing some great battle in the past or a king acting as a heroic leader in war time (partially historical), an example of the moral virtues of a leader willing to sacrifice himself for his subjects, an allegory of the human struggle against evil and as analogous to Christ's sacrifice on the cross. These wouldn't be regarded as alternatives, but as all present in the text and discoverable by a discerning reader.