The story is about the plague.They thought, as did many others centuries later, that the plague came from the rats. They worked to exterminate the rats, thinking it would cure their problem, but as it turns out, the rats weren't the ones that transmitted the disease in the first place, and the Children were "taken" by the plague. The "hundred years ago" was the record of a particularly bad bout of plague that killed all or most of the children in the town. The attributed this to some sort of dishonestly on their own part, and the story became a penance for their own demons.
- This would be a theory playing much closer to the literary minded interpretation rather than the historical. Namely because so much of our association with the plague comes from this story as it was later told, not the other way around. If a plague had ripped through Hamelin and they kept the record of it, why oh why out of all the things they could have used in the memorial would they pick a pied piper if he didn't represent an actual person?
- The other problem being that the rat element of the story is absent for over two centuries. Making the more logical argument it was an element later storytellers added based on the older historical story. The more fanciful alternative being the true story leaked out through the folk despite the town's denial. Which ironically is an argument used also for the crusade theory with the folk tale being the alternative history to derail from the truth of this supposed failed crusade. For the sake of historical skepticism we should remember though just because we can't find records of a tale isn't a complete absence confirmation. So while there's no proof at least in theory talk it's possible we may come upon previously unknown versions that could fill in the map more.
- Clearly though the Pied Piper remains one of history's unsolved mysteries that a lot of people just gloss over as a literary tale and just that. It's also one to get a history and an English major to go at each other over.