Well, there are quite a few examples of actors who have been used in books and screenplays.
Queenie was based on Merle Oberon
The Star was based on Joan Crawford (written by two 'friends' of hers and played by arch rival Bette Davis).
Helen Lawson in Valley of the Dolls was based on Ethel Merman.
In the The Godfather Johnny Fontane was supposedly based on Frank Sinatra
How much is based on the real person depends entirely on the author's discretion (or not), and what their relationship was with the person was like. Jackie Susann had a falling out with Merman, so her portrayal was never going to be flattering.
It's one of those things that if done well, it makes for an intriguing character study. If it's done badly, it's tacky.

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