My son likes to make up his own stories too. When we read books together, he likes to add extra words to or sometimes made up his own.
He likes to create new lyrics for nursery rhymes I sing to him before bed and coax me to sing the made-up lines.
However, when he has his mind set on something, it's very hard to convince him otherwise. For example, he has seen that Saturn has rings and that's how he remember Saturn...when we read another planet book which explains more in details that some other planets have rings too. He was not happy to see rings around Jupiter! To him, the only planet with rings is Saturn!!