How did Sai Baba explain that his physical body was the eternal Brahman and therefore the ultimate object of worship?

This interpretation is incorrect based on the teachings provided in Chapter 3. Sai Baba made a very clear distinction between his physical form and his true, universal nature. He explicitly stated, "Sai's body is perishable; the Brahman is imperishable and worthy of worship." He did not equate his mortal body with the eternal Brahman. Instead, He taught that He is the all-pervading eightfold nature (Ashtadha-prakriti) and that there is no object in the universe different from the Self. His guidance on worship was to cultivate the feeling that He is everywhere, which leads to the dissolution of 'I' and 'mine,' rather than focusing worship solely on his perishable physical form.