One problem with this theory: When August added the Pinnochio pages to the book, they were fresh. (There was no place to store them on his person and keep them in such a good condition when he arrived, we saw that he had no papers in his type-writer box) And remember that there were illustrations for that section as well:
I don’t think August wrote/drew anything outside of the Pinocchio section, I think he’s more of a forger (read: a liar as we expect from a Pinocchio incarnation), and so he was able to copy the style.
I agree with you about the dagger. Not necessarily about someone else having to draw it, but that August couldn’t have done it without help from someone who knew absolutely perfectly what it looked like. If he was telling the truth about the Blue Fairy having told him back in FTL (and likely without any images), the 28 years that have passed would have most certainly left him unable to draw a perfect representation… Which leaves: Someone who is more familiar with Rumple and the dagger, someone who is more familiar with the book itself (the original creator), OOOOOR… The story of Rumplestiltskin is in the book, so there is an image of the dagger that August could have copied in the time he had possession of it.