Take a story's temperature by studying its tone. Is it hopeful? Cynical? Snarky? Playful?
Knickerbocker is our straight man, telling it as he sees it. But here's the thing: what he sees is absurd. Take this description of Ichabod's fine dancing (please!):
Not a limb, not a fibre about him was idle; and to have seen his loosely hung frame in full motion, and clattering about the room, you would have thought Saint Vitus himself, that blessed patron of the dance, was figuring before you in person. (1.47)
We dare you to find a paragraph of "Sleepy Hollow" that isn't infused with some impressive—and apparently timeless—humor.
It's also worth mentioning that our narrator often has no clue what's going on. When Ichabod decides to woo Katrina, he writes, "I profess not to know how women's hearts are wooed and won. To me they have always been matters of riddle and admiration" (1.30). In other words, "I don't know anything about the ladies, but I'll try to tell you what I can about Ichabod's romance." This is not a guy who inspires confidence.
Check out what we have to say about "Narrator Point of View" for more on why we can't trust this dude as far as we can throw him.