1. Here in “ce qu’il y a de vrai”, ce qu’ means basically “what is true and what is not” suggesting there might be some true stories and some that are merely fairy tales. Hence, there is a nuance you wouldn’t get with a dichotomic if. (is the legend true or not)

2. As you are saying, there is actually a distinction between de and du. Interestingly here, du (some) would express the range of nuances that I explained in 1. ex. Il y a du vrai là-dedans would mean there is some truth to it but we already have that sense of a range thanks to ce qu’. On the other hand, de gives us the sense of a dichotomic judgement.

In terms of logical construction, you could say that:

• ce qu’il + de = in the substories of the legend, what is clearly true or false
  –> “J’ignore ce qu’il y a de vrai là-dedans”
• ce qu’il + du = in the substories of the legend, what is approximately true or false –> not working syntaxically

Note that “J’ignore s’il y a du vrai là-dedans” would bear a similar meaning as
“J’ignore ce qu’il y a de vrai là-dedans”: “are some of the substories of the legends true?” vs. “Does the legend as a whole hold some truth?”