Writing historical fiction using a primary source as framework

I am beginning my journey of writing a historical fiction novel. My protagonist is going to be my vehicle character to write about another historical character, something analogous in style to "The Last King of Scotland" movie.

I have found a firsthand account written by someone who fits this vehicle role perfectly, written in the early twentieth century. I plan to use his account as a framework, taking, rewriting and otherwise fleshing out some scenes from this, as well as many others that will be my own creation, focusing further with my own research and ideas on the historical figure.

My query here is what experiences or advice you lovely folks might have on doing something like this.

I have a history degree so I have been very much ingrained with the idea of properly recognizing sources. Is there a protocol for doing what I am doing. I know it is not outright plagiarism but at the same time I am weary to just dive in.

Is there an ethical code among writers to deal with writing something of this nature?

Is there some guidelines or pitfalls on writing something "Based on a true story"?

On the flipside, what loyalty does one have to the source material if they do not care for 100% accuracy for the sake of story telling?

Any and all further advice, tips or questions you may have would be greatly appreciated.