Is  the character 年 (or its etymology) related to the mythical beast in Chinese mythology?
I think it's just a folklore, because every time I read this story, I can't find the source of the floklore cited there. I never treat this stroy seriously.

The oracle form of the character "年" is:(note: one oracle character may have different but similar shapes, because characters were not standardized at all in that times)


The upper part looks like a bundle of grain, and the lower parts look like a man. This shape depicts a man with a bundle of grain on his back. It origninally means "the grains are ripe and human being need it".Because the grain plants were ripe once per year(in ancient times, argricultural tech was very low), the meaning of "year" derived.

Below is the different shapes of "年" in different times,showing its evolution. The picture comes from a great online dictinary "汉典",however, it's only in Chinese. From left to right, the shape was used in "甲骨文(oracle,which is the oldest as far as we know)","金文(popular in 商and 周 dynasty, carved on bronze castings)","小篆(a standardized font, used in 秦 dynasty)",“楷体(the modern Kai font)". You can see that 
in 金文, the lower part became "千" and in 小篆, the shape was similar with the original 秊.