I think that history is generally unknown to most people. Even with Lego Castle themes, we see a mix of weaponry and styles that have little to do with real history. That being said, certain story elements do seem fairly known, such as Kungfu fighters, Journey to the West, and Three Kingdoms (among video-game enthusiasts anyway).
There are two sides to this: the sets themselves and the theme-story about the sets.
The sets can be just cool China-themed castles. Using some different building styles and such. This can include a small and large "junk" style ship (using the common English name for it). I actually want this more than the castles.
The theme-story, on the otherhand, can and should be completely made up. For example:
The standard option is to have a few factions (ie. Phoenix Kingdom, KungFu Heros, Fox-Spirit cultists), mirroring what Castle is usually about.
Non-Licensed Ancient Chima ... which is just Chima with ancient Chinese characteristics in Castle sets
Licensed Kungfu Panda series - which is just Chima with ancient Chinese characteristics in Caste sets, and names from the show slapped on the same mini-figs. This would be very cool, and Kungfu Panda seems to be very popular.
Just my thoughts on how that could work
OK. I'm sort of sorry for bringing that up. It seems there is a movement among many Asian - Americans to change they way they are portrait in media (google "Not your Asian side-kick"). To me, the Oriental Adventure theme seemed to go into sensitive territory in some way, but I don't think it matters as far as these discussion forum.