I rarely write fanfic, and I've never written fanfic of this type. But when I'm reading certain kinds of stories, I find myself daydreaming this very often. Not with every story, or even every good story: it is most likely to happen with stories that are tense and compelling, and have one or more of the following: 1) horrible events that would be easily preventable with foreknowledge 2) likable characters that abuse each other because they don't know one another as well as the reader does 3) a lot of doomful foreshadowing. So, for instance, I daydreamed a lot of self-insert stuff when I was reading Sanderson's Words of Radiance, but none when I was reading Sharon Lee and Steve Miller's Conflict of Honors. I suspect I'm more likely to do it with long novels and series than with short ones, because I'm spending more time immersed in the story's unresolved conflicts, but length is neither necessary nor sufficient.
Like Tufty, I don't think that plopping a knows-all character into the middle of an existing narrative makes for very good fiction. But I did find myself wondering how to write original fiction around the same basic premise. The "character who has read the book of your lives" is the kind of genre-savvy trope that tends to throw an audience out of the story by calling too much attention to the fact that this, too, is a story. Even so, there are examples of this kind of work in mass-distributed fiction:
- Michael Ende's The Neverending Story, about a boy reading a book who eventually becomes part of the book (although IIRC he doesn't get to use his knowledge of the book's events as prophecy).
- The Last Action Hero and The Purple Rose of Cairo both involved a 'real world' and a 'fictional' protagonist, where the 'real world' protagonist was familiar with the works in which the fictional one appeared. Neither one used familiarity with the specific story to affect the outcome, though in Action Hero the 'real world' protagonist used being genre-savvy to predict the outcome of various fictional events.
- Prophet has visions of other characters, from their PoV. Some of these are things that happened in the past. Some of them are about the near or far future.
- Prophet uses the visions to figure out what needs to be done to prevent disasters in the future, acts to do so, and thus changes the outcome and renders some visions the prophet already had obsolete.
- Prophet has new visions based on the new future. Repeat until resolution.
I don't know if I'll do anything with this. I tend to write too long anyway, and writing up multiple timelines for the same story sounds like it would exacerbate this tendency even more. But part of me wants to do it, because I think it would be interesting to have one character that knows so much about the others, even though they don't know her. That's why I want visions of the past as well as the future: I like the idea of a protagonist who knows and loves the characters the way the reader does, because she knows them as well as we do.