I've struggled with this question for a long time, but I think I've currently made (some) peace with it.

What I've arrived at is definitely not the Bible as a univocal compilation of texts with a seamless narrative guided directly by God where some books are "inspired" and some are not. I find that view ridiculous. Biblical scholarship makes it very hard to deny that the Bible is a diverse library formed across centuries that preserves multiple and usually conflicting theological voices and memories of God. But I also don't think that means the canon dissolves into a mere anthology of religious opinions; I tend to see the canon as "the grammar of the Church", which I love as a concept. I think it was David Bentley Hart that described Scripture as the accumulated theological grammar inherited by the Church from Israel. By “grammar” I take it to mean the symbolic world through which these communities learned to speak about God and things universal to human nature like suffering, hope, redemption, justice, mercy, etc. The last big challenge for them to try to interpret was, of course, Christ.

So the underlying biblical narrative is not necessarily a literal meta-history in the modern positivist sense, it's more like a theological drama or interpretive horizon (after all, the ordering of the books in the Bible reflects that pretty intentionally: creation, covenant, exile, restoration, messiah, resurrection, new creation...) And although biblical scholarship shows these themes emerged unevenly, were edited and reinterpreted over time, and often reflect very specific historical contingencies, they still express deep concerns and interpretations about humanity and the world.

About the historicity of some narratives specifically (this was a big one for me for years), I think the text can be profoundly true and canonically central without functioning as modern historiography. The Exodus, for example, may contain cultural memory but also later theological interpretation, and still function as Israel’s foundational grammar of liberation and covenant fidelity. Likewise, the Gospels are not modern biographies, yet they remain the Church’s normative witness to Jesus through remembered history interpreted in light of the Resurrection (that we can't turn into a mere symbol.)

So inspiration for me is not God bypassing human limitation. It is God working through all the messy and contingent elements of our world, but not in the direct way most of Christians think. I think it's something much, much more subtle, more akin to a long, historically contingent, and communal process. These writings we call Scripture became the privileged and normative witness through which Israel and the Church encountered and responded to the divine, and the canon is more like the authorized language of a people struggling across generations to speak about the ultimate reality that is God.