Sai Baba says 'I myself shall enter with 'I-ness' and write with my own hand.' Doesn't this imply that Sai Baba's own ego is taking over the author's work?

This is a misunderstanding of the concept as presented in the source. According to Chapter 2, Sai Baba's statement about entering with "I-ness" is conditional upon the devotee first dissolving his own ego and surrendering it completely at Sai's feet. The text clearly states, "When the ego is dissolved, no trace of it remains. Then I myself shall enter with 'I-ness' and write with my own hand." Therefore, the "I-ness" Sai speaks of represents the divine consciousness filling the void left by the human ego, not one ego replacing another.