I think that "Alias Grace" does quite a good job of accomplishing a literary re-writing of history. Literary implies that it is descriptive, tells a story, and adds flourishes and embellishments as necessary to fill in important gaps in the storyline and in the characters themselves. Re-writing implies that it uses historical evidence to keep things based or centered in actual fact and events that are documented to have occurred. Margaret Atwood did a lot of research for this novel, reading accounts of the events, and actual newspaper articles, courtroom transcripts, and other factual documentation. Through all of these primary and secondary sources, she was able to piece together a timeline, and the basic outline of some events that occurred in the murders. As evidence of this, she includes actual documents in her novel from the courtroom, newspapers, and other sources. She uses them in her novel as a part of the actual story-telling process; she relies on them to convey facts crucial to the tale that she is telling. That suggests that she is trying, as best she can, to keep things rooted in fact and actual history.
After she had all of the facts researched as well as she could, she then added the literary flare to it all. Enter Dr. Simon Jordan who interviews Grace, Mrs. Humphries and the relationship she pressures Jordan into, and other various touches and elements that added cohesiveness and filler to the main events of the story. These literary characters provided a vehicle in which to introduce Grace's story; they aided well in being devices through which to get at some sort of truth, or the version of truth that Atwood creates. Atwood also fills in gaps based on inferences and suggestions from the facts themselves, and fleshes them out into actual scenarios and conflicts. That is the literary aspect of the venture.
One possible problem is that Atwood decides to take a leap and give a concrete reason for the murders, solving what remains, in historical records, to be an unsolved mystery. She took great literary license with that, and possibly manipulated the integrity of her tale as a result. But, it's a fascinating ending that she uses, so, it provides great food for thought, and fodder for the imagination.
I hope that those thoughts helped; good luck!