In art, there are essentially 2 ways of creating a new work in an old style.

RETRO – attempts to preserve all aspects of the old style, including the themes and techniques that were appropriate to the time. a "retro-noir" film will be set in Los Angeles in the 1930s. It will incorporate themes that were explored in the original works, like political machines, graft, a "chump" or fallguy as the MC, deceit and betrayal in personal relationships. Essentially it is a new (original) work that could have been made during the era of the old style.

NEO – takes the overall tropes, affectations, and style-cues from the original, but is consciously transposing that style into the modern era with commentary, juxtaposition, heightened or exaggerated representations, and a structure that is inherently more like contemporary media. A "neo-noir" film might play with a trenchcoat detective and a femme fatale, but they are exaggerated becoming more a commentary on how the trope evolved over the decades, rather than a realistic or naturalistic evolution.

Retro recreates the past, Neo re-invents the past. There will be inevitable blurring and crossover between these concepts, but for authorial intent it may be helpful to understand when you are invoking one and not the other.

The big question here is whether you want an old-fashioned style, which is relatively superficial, or whether you want to emulate older modes of story-telling at a deeper, structural level.

If it's the first, all you really need to do is avoid anything that feels conspicuously modern, emulate period sensibilities, and sprinkle it with a light dusting of period language and details. That's enough for it to be fun and engaging, without it getting too annoying. Johnathan Strange & Mr Norrell was a very successful work largely in this mode.

If it's the latter, keep in mind the result may not seem old at all --it may even seem startlingly fresh and new. Because using very old modes of storytelling IS innovative.

There are many elements of style, of the narrator voice, that have changed over time. @ChrisSunami talks about this, and brings the example of Jonathan Strange & Mr. Norrel - one example I was going to bring. Let me give you some other examples, with the various effect they produce.

The translation of the Aeneid that I have standing on my shelf is a translation to Hebrew, that has been done using the language and turn of phrase of late 2nd Temple. (Contrary to what some might believe, the language is perfectly accessible. We Jews just have to be an exception to every rule, so we went and preserved a language virtually unchanged for 2000 years.) Such a translation choice sort of makes sense - the Aeneid was written around 20BCE, so translating it to the Hebrew of the day is not a total case of "what were you thinking?!".

While the language was that of 2nd Temple Judea, the style was of course that of Virgil - it was, after all, a translation.

The effect of such a text is not unpleasant, but it is weird. Words and expressions are used in ways they have not been used before - turns of phrase I have only ever seen in the context of one particular prayer, for example, are turned to other uses. The use makes perfect sense, but the weirdness is still there, even towards the end of the epic. At times, it threw me out of the reading entirely, and I stopped to observe the effect the words created. (I do not consider this necessarily a bad thing. But it is a thing that happened.)

This could be an effect you might wish to deliberately invoke. Still, you need to be aware that this is the effect that will be produced if the language you use is too old and context-specific.

A completely different example is The Lord of the Rings. The language Tolkien uses is not particularly antiquated. It doesn't strike you as either "modern" or "old", except when he seeks to invoke a particular effect. What Tolkien takes instead into the story is sensibilities that belong to a medieval ballad rather than a modern novel. He introduces characters, and tells us about them straight away, instead of letting them reveal themselves. The men in his story are "larger than life" in their heroic resolve and feats of arms, the women possess an unearthly beauty. They all act on "callings", not on whims. It could almost be argued that the hobbits are the only real, flesh-and-blood humans there, and they have somehow strayed into an ancient ballad.

Think of style not as one thing, but as a combination of elements. For each element you can decide separately whether, and to what extent, you want to have it "period" or "modern". Various uses of each element are possible, producing different effects.

I would agree with @Amadeus that stepping out of the language-style-sensibilities modern comfort zone would place more demands on the reader, making the reading somewhat "harder". However, I believe it also has the potential of being more rewarding, if you make good use of the tools in your hand. (Consider The Lord of the Rings as an example.)

Is it possible to narrate a novel in a faux-historical style without alienating the reader?

Presuming you mean "the majority of readers", I don't think this is possible.

Most readers of fiction enjoy getting into the "zone" when reading, absorbing the story almost as if they are not reading, their imagination is fully engaged and the reading is effortless.

I do not think that is possible when the reading is work, when it doesn't meet their expectations of a modern story.

That said, I think you can stick to modern words that had equivalents in your time, and skip the modern idioms. You can look up both etymology of a word and the often the idioms.

Personally, when writing for medieval times, I eschew all idioms and make up my own.

You can also stick to attitudes, beliefs and science that is plausible for the time, these are easy to research.

But that is the limit of what I would try. I would make the prose and dialogue, minus modern words and idiom, easy to read without breaking the reverie of reading.

In my opinion, for the majority of readers, if the reader has to struggle through archaic grammar, or spelling, or words no longer in use or with different meanings, even one per page, they will give up and quit reading. I don't think they expect a novel to be work.

Your best bet may be a first person narrator.

If your narrator is a character anyway, then the limited POV shouldn't be an issue.

With 3rd person narration, even if it's from the POV of one specific character, the narrator usually has a voice similar to that of the reader and it can be weird or off-putting to instead give the narrator the voice of the characters. That's not always the case, but you've pointed out cases where it is a problem.

Not all historical novels even have dialogue like the time period. But if yours does, a first person narrator would be expected to share it.

You might also consider the story within a story method.

If the narrator is telling one or more people about the events (which can be from that morning or last week or 20+ years ago), s/he would speak in the style of the times. This won't preclude the narrator being a character in real time. This is the sort of method that can be done poorly and stick out, but can also be done such that the story telling sounds like any other narrative book.

All that being said, be careful if you're recreating what you think is the way of speaking of "Biblical times." Not only was the language different (not just "not-English" but ancient versions of whatever language was used at the time) but we simply don't know the way of speaking. The narration is much later than the action and the style was not folksy or meant to be descriptive of the times.

Include Excerpts written in the old style

You say you want to focus on a character who recorded his lived experiences. This character could narrate their experiences in 1st-person reliable past-tense in a modern style, but then occasionally include excerpts from their diary as they write it, possibly in a 1st-person present tense or 3rd-person unreliable past-tense. Like this:

I found him pinned under his horse, bleeding from his shoulder where a spearhead
had slipped under his armor. I checked his pulse. Dead. I took out my quill and
laid the parchment on the flank of his horse:

On this the ninth day of the ſiege of CaſterWyne, I find before me the Noble Lord Granger, slain by the pikemen of ArchWood. Riding fearleſsly he fell upon the enemy and was knocked from his horſe. His armor is stained with blood and his noble crown,

I stopped writing. His crown wasn't there. I looked all around. It wasn't anywhere.
My pulse quickened. I grabbed the parchment, not caring if the ink smudged, and
shouted for the commander.

This would have a bonus of letting you show things about your character through the differences of what he writes in his diary vs how he describes it as a narrator. I didn't mean to when writing it, but the main character of my example doesn't seem too bothered by the death when he finds the lord, but then writes about it as if it's very tragic, revealing that he is writing probably not only for himself to read. Also if you have both modern style and old style describing the same event, you are effectively providing a Rosetta Stone that can help the reader learn to better understand and appreciate the old style.

This is absolutely possible--with the old caveat that you can't please everyone. One great example is Patrick O'Brian's Aubrey-Maturin Series, which managed it over thirty-something years and twenty books, and has become something of a cult classic. These are set in the Napoleonic wars, and narrate the friendship and exploits of two men, one an English ship captain in the Royal Navy and the other an Irish-Catalan doctor who goes to sea with the former to escape poverty on land. Narration is generally third-person limited (with lots of dialogue and some journal-entry or epistolary sections) and the narrator, as well as the characters, strongly echoes a period author's word choice and structure.

There are three lessons that I would draw from this example:

1. In terms of writing style, don't be afraid to go all-in. O'Brian's works fit the period extremely well--it's often said that they read almost like actual period books. Write it well and your audience will come along with you. You will turn off some readers, this is inescapable, and it may dampen your commercial prospects, but if it's the story you want to write, do it. Be aware that if you want to get the tone right, you'll need to immerse yourself in writings of the period you're using as your inspiration, to the point that you find yourself adopting those turns of phrase almost without realizing. But needing to do research is inevitable if you want to do something convincing. (You don't have to be bound to write what you know--the world isn't hurting for navel-gazy middle-class litfic novels about grad students in writing programs--but it's absolutely essential you make sure you know what you write.)




2. But don't let the period language dominate the story or overshadow the characters. One of the things that makes these books so loved is that the characters remain very distinctive, both in terms of their personal idiosyncracies and the way their speech reflects their (social, national, ethnic, educational, class etc.) backgrounds. Make sure that your different characters speak and act like different people, and you'll do a lot to cut through the hypnotic "sameness" that can sometimes come from writing in an artificial style.




3. And finally, don't forget that every period experiences and expresses diversity. Different people talk and think differently from each other, whether today, 200 years ago, 2000 years ago. In addition to providing an opportunity for variety in your language use, this also means that you can bring readers into the story world by having them learn alongside the characters. O'Brian does this with nautical terminology; he does not shy away from using highly precise technical language, but he introduces it to his reader by having a character in-world require an in-world explanation (and subsequently having that same character make lots of mistakes and require further correction). If done right, this can improve the richness of your world and your characters, while also allowing a window into some of the more challenging parts of your writing.

To sum up: this is a brave choice but one that may produce a really interesting work. If you want your readers to care, make sure you do your homework and do it well; give your readers a window into the language and world; and make sure that you don't neglect the characters, the plot, the story.

I recommend a deep comparison between the Bible and how its various authors structure their writings and how modern authors have tackled that same time period. The one that springs to mind for modern authors is Francine Rivers' Mark of the Lion series. She goes into great detail about what went on during that period, and the different characters roles/reactions in it.

Perhaps between these two sources you can find your own special voice for this time period?

In Quebec, an artist named Fred Pellerin became famous with an approach very similar to the one you are describing. I feel he doesn't alienate the public with his style because he invites them into national dreams that most can relate to.