Those real-life stories are the ones that should be told. I feel that all works of fiction work to undermine actual human stories, distorting and misleading to the silly psychological whims of the author. Huxley and Orwell remind me of spoiled old libs who obviously never experienced what real people suffer. If they did, they would have been able to cope with their fears and delusions without writing long and complex stories about them.
My 2 cents... I value their work as entertainment and mildly insightful. As for Ayn Rand, I know she wrote (reality-based) essays besides her novels. That's a format I'm more open to take seriously.
The point of argument is to persuade, and I don't think I can persuade you to view fiction in a different light, but the statement, "...all works of fiction work to undermine actual human stories, distorting and misleading to the silly psychological whims of the author..." runs counter to all human experience. Did Shakespeare undermine 'actual human stories'? Milton? The Psalmist(s) of the Bible? Were they driven to write by 'silly, psychological whims'? Do you believe, then, that all fictional literature and--possibly by extension--all art: painting, music, sculpture, et al, undermine the 'actual'; that is, distort and falsify, rather than contribute to our understanding of reality?
I suggest you pick up a novel commonly considered to be a great piece of literature--Twain's Huckleberry Finn, say, or anything fictional not written by Ayn Rand, and give it a try. The great novelists seek to share a truth about the human condition with their readers, and know that a bare recounting of facts does not get the point across as effectively as a work of fiction. Jesus spoke in parables for a reason.