The fragile timbers of the mightiest Viking warship ever found are being tenderly pieced together at the British Museum where it will be the spectacular centrepiece of the biggest Viking exhibition in a generation.

Reconstructing hundreds of surviving timbers, and the steel cradle which holds them and completes the ship's long sleek outline is considerably more straightforward than when it was built almost 1,000 years ago. In 1025 it is estimated to have taken more than 30,000 hours of work. This time around, lead curator Gareth Williams received "an enormous Meccano set" from Denmark, flatpacked in several large containers.

Williams described the ship, which will launch the museum's new exhibition space in March, as "a war machine", a troop carrier which would have spread terror wherever it sailed. Although most of its timbers rotted over the centuries it was sunk in the silty water of the harbour at Roskilde, the entire length of the keel survived. It is almost 37 metres longer than ships built centuries later, including Henry VIII's flagship, the Mary Rose.

The ship may have been built for Cnut, the Viking king who ruled over large parts of Scandinavia and England. It was found by chance in 1996 during construction work for an extension to the Viking ship museum at Roskilde. Known as Roskilde VI but too large to exhibit at the site, it spent years in tanks of water, before being conserved for this exhibition, a collaboration between the national museums of Britain, Germany and Denmark.

It will be seen among treasures illustrating the territory that such ships opened up to the Vikings, from the Arctic to north Africa, and east into Russia and Byzantium. Included among them will be many swords, axes and loot, including the spectacular Vale of York hoard of silver from across the Viking world, found packed into a pot which was once a liturgical vessel.

Shetland connection

The curators have just returned from Shetland where shipbuilders making replica vessels regard themselves as the living inheritors of Viking genes and traditions: DNA tests show many to have Norwegian blood.

There, a replica at Cullivoe is almost complete, one at Lerwick is ready to be paraded through Shetland's capital on 28 January, and the galley at Scalloway is already a slick of ash on the harbour, having been pushed blazing into the sea last weekend by a bellowing squad of men in helmets, cloaks and mail shirts, battle axes slung on their backs.

Half of Scalloway, the ancient Viking capital before power shifted south to Lerwick, marched with blazing torches in the procession – joined by rare invitation by the curators and journalists – while the rest lined the narrow Main Street. The parade was led by the elite Jarl's Squad of heavily bearded, costumed Vikings, headed by the Jarl himself, offshore oil worker Kenny Grant boasting a raven-winged helmet.

As they bellowed the Up Helly Aa song – "Our galley is the people's right! the dragon of the free; the right that rising in its might brings tyrants to its knee" – Jarl's Squad, knew it was part of a carnival tradition invented in the late 19th century, and yet felt the lyrics to be true.

"To me the Vikings stand for strength, comradeship and honour," Grant said.

Up Helly Aa is the biggest tourist event in the Shetland calendar, doubling the population of Lerwick in the islands' long winter, and bringing visitors in to the towns and villages which hold fire festivals flanking the main event.

Not everyone on Shetland likes either the carnival or the Vikings.

"They [the Vikings] were a bit psychopathic," said Brian Smith, archivist and historian of Up Helly Aa. "These people achieved remarkable things, but there was always a price to be paid in blood."

In contrast to what he regards as the brutal truth of the Vikings' early years in Shetland, Smith believes that Up Helly Aa has been increasingly sanitised, losing its rough-edged vitality. The tradition of rude rhymes endures – Grant was mocked in Scalloway for shaving the beard he'd been growing for two years in order to travel to Canada for work – but Smith said the targets used to be institutions, the rich and the powerful, not individuals. "In the old days there were regular threats of legal actions."

Ian Tait, historian and curator of the Shetland museum, is bored by Up Helly Aa – "I wouldn't cross the room to look out the window" – but also believes that the true story of the Vikings' arrival in Shetland was drenched in blood.

"The question of what happened to the people who were here when the Vikings arrived is not one of the Shetland questions – it is the Shetland question."

Shetland's official archaeologist, Val Turner, believes the sites, where Viking long houses sit beside or even re-use much older structures, are evidence of reasonably peaceful assimilation as the raiders gradually settled and became farmers. But to Smith and Tait it looks more like genocide, with the entire existing population – including the mysterious Picts, who vanished leaving beautiful carvings and a still untranslated language – either slaughtered or enslaved and worked to death.

"I admit that there are no pits full of butchered bodies, or if there are we have yet to find them," Tait said, "but every single place name on Shetland is Viking – that doesn't look to me like peaceful assimilation, that is more like year zero, the clock re-set, a contemptuous obliteration of everything that went before."

Williams – a Viking re-enactor for many years until he decided he'd taken too many battle-axe whacks for the good of his scholarship – said: "The question of the Viking inheritance is a mixed and sometimes dark story – I was honoured to take part in the Scalloway procession … In Scalloway the fire festival is a true community event, organised by people who feel a deep connection with their own past. Some of that history is real, some of it made up, but the sense of engagement with history is real, and something that I've been trying to inspire throughout my entire career.

"In a sense I've been carrying a torch for the Vikings all my life."

• Vikings: Life and Legend is at the British Museum from 6 March until 22 June © Guardian News and Media 2014