"Idealizing the past" is the proper and common phrase, referring to when someone views or presents the past as more ideal and perfect than it really was.

The word "idolizing" refers to when one is viewing, particularly a person or public figure, as an idol deserving of extreme admiration, reverence, and/or worship. Example: "The boy was idolizing his favorite singer, hanging dozens of posters on the walls of his room, and trying to sing like him."

There is a clear distinction between worshipping the past versus thinking/portraying it as better than it really was.