Lets say that Punjabi Literature and authors are gems as well. But Punjabi cinema is drawing more inspiration from Kanedda , Chandigarh vich aashiki, bullet ke gede etc than the local legends.
That's true, unfortunately. There's plenty of material for films above and beyond what you alluded to. Currently filmmakers are just cashing in on the success of a few movies that managed to bring in audiences without the need to explore other topics. But Punjabi film makers should realize this formula based film-making wont last for long. They are competing for audiences who watch H'wood and B'wood movies and this affection for Kanedda, Badmashi and Aashiqui wont keep audiences trooping in forever.
That reminds me, if possible do watch the award winning Punjabi movie Anne Ghoda da Daan. It won a few awards at international fests and is quite different from the run of the mill stuff.