It is based on a true story in as much as Butch Cassidy, who the film is about, was a real life character. His real name was Robert Le Roy Parker, and his partner in crime, the Sundance Kid, was really called Harry Alonzo Longabaugh.

Many of the details in the film Butch Cassidy and the Sundance Kid are based on fact. That film ends with the two apparently (though not for sure) about to leap to their deaths in a shootout. It was though that both men died in a similar way in 1908, but it wasn't possible to identify the bodies for certain and for many years there were rumours that Cassidy (or Parker) was still alive. His sister later claimed to have seen him again, and so did others. He may even have survived until the 1930s.

So there is some basis for the idea in Blackthorn, about Cassidy surviving, though if he did, nobody knows how he spent his time.