Happened a great deal in a legendary town (7)
I believe the answer is:
camelot
'a legendary town' is the definition.
(I've seen this before)
'happened a great deal' is the wordplay.
'happened' becomes 'came' (to happen upon and to come upon mean to encounter).
'a great deal' becomes 'lot' (both can mean a large amount).
'came'+'lot'='CAMELOT'
'in' is the link.
(Other definitions for camelot that I've seen before include "Musical about King Arthur" , "Place of truth and beauty in Arthurian legend" , "Mythical British kingdom" , "Arthur's or Kennedy's court?" , "Fabulous city" .)