His family was actually of the line of Salazaar Slytherin, pure-bloods by nature, and most of them very anti-muggle. St. Patrick was said to be a parseltongue as well, having inherited this gift from his ancestor. Because of his parselmouth abilities, the legends grew and according to Magical History, St. Patrick did manage to remove the threat of the snakes and basilisks in all of Ireland thus removing the advantage of Slytherin's terrorizing the muggles of Ireland. It is even said that his Patronus charm took on the form of a snake.
These histories and legends eventually crept into muggle myth and lore. This explains why on St. Patrick's Day, so many muggles where green and why the stories of him chasing out the snakes of Ireland still stand firm to this day among muggles. St. Patrick was also known to be a very skilled potionmaker in his day as well. He was actually one of the wizards to successfully brew the Felix Felcis potion for the first time as well which is why so many muggles hold fast to the idea of luck on this very Irish holiday.
As for the stories of leprechauns among muggles on St. Patrick's Day, well Ireland is packed with leprechauns anyways. It really isn't any doubt that they'd creep into muggle myth and legend.
