I've been sort of influenced by the Sweetie Belle Chronicles and Pony POV interpretation of fanfiction in-universe(which may have affected the way I view the PPC as a whole, too. It's certainly helped me quantify it.) as a series of alternate possibilities for the way a world could operate, each existing as its own separate entity, but all under the sway of the Heart World, or the actual canon, in that changes in the Heart World can create changes in the deviations from it. No one would have included Breezies in fanfiction back in Season Three, but now that they've been introduced, they're going to start popping up in a number of places, but not necessarily in all places. However, that does not automatically invalidate the fanfictions written before the introduction of the species or the fanfictions that decide not to include them, just like Twilight getting wings at the end of Season Three doesn't invalidate any future scenarios that show Twilight without wings at some point late in her life.
Therefore, everything not canon is, by default, AU to some extent, and the stories that are labelled AU are the farthest-flung from the Heart World while keeping to its... I suppose the best word would be orbit. To get back to the point, I think that Printworthy interacting with his role as it would have been as opposed to what it is now would be a great idea for character development. He is from a world where he is the author of Daring Do, and both has to come to terms with the fact that the advancement of the Heart World has blocked him off from one of the certainties of his past, and to terms with what he is now as a PPC Agent and a divergence from canon that still seeks to defend it. Also, the idea of canon trying to reassert itself around Printworthy as the "author" and placing him in direct conflict with/partial fusion with A.K. Yearling could provide plenty of fodder for comedy, and could give you a third voice to comment on the badfic with if you want to.
Actually, the authors spinning in their graves is a humorous extension of a popular idiom. When someone does or says something that completely goes against a famous figure's work and accomplishments in life, people may say that the person is "spinning in his/her grave", suggesting that even the dead body of the figures would be so affronted by the transgressions that they spasm in their coffins out of sheer rage. The sheer number of terrible fanfictions in the multiverse would, therefore, mean that the author would be ragefully shifting and convulsing around more or less constantly.
DoDAEG discreetly exhumes the corpses of particularly maligned authors and replaces them with body doubles, then wraps the body in a special material that regulates their spinning and allows the body a full range of motion, and then straps those bodies into several large machines, which act as generators by collecting the energy of that constant motion. There's no magic involved. Just defilement of graves and some extremely dubious science. Then again, this is a setting that stabilizes plot holes and uses them as a mode of transport, so science isn't really the top priority.
I doubt that the author generators are the only source of power in DoDAEG, especially since the Power Cut that the Black Cats created back in 2006 showed everyone how vulnerable they were, but they're still the most well-known and prominent ones, since they're part of the name of the Department after all.