I remember reading about a Rollo who, with his men, invaded Normandy about a century before the Norman invasion of England. Rollo and his men ended up blending into Norman society and changing it significantly after a local king signed a peace treaty with them. Still, you're right about the time frame. A century before the Norman invasion would be 966 AD and last night's episode was dated 796 AD.
Michael Hirst states that he based Athelstan on an actual historical figure who was captured by the Vikings, adopted their ways, and then was crucified as an apostate upon returning to England. There was an Anglo Saxon king Athelstan, as well, before the Norman invasion, but he was Alfred the Great's grandson so that also dates him in the 10th century AD, too late for our intrepid band. As for fictional Athelstan, (who supposedly becomes a much closer confidant of Ragnar now that Rollo is on his shit list) I'm thinking there has got to be some serious Stockholm Syndrome going on for him to admire Ragnar. His mind is allowing him to doubt his Christian God and to (attempt to) embrace the Norse gods so he can survive mentally and make sense of his fate. Who knows? Hirst might allow Athelstan to suffer the same fate at the end of the series. I doubt that 8th century Anglo Saxons had any conception of Stockholm Syndrome or post traumatic stress.