The Blue Fairy Theory is a good one. It is plausible she like Rumple has been in a lot of the storylines and interacted with many characters. It would make sense for her to know a lot of what happened and why not write it down especially if it can help the savior do her job. The book I am willing to guess contains magic or some unlock of magic for Emma. Every story she reads does something to her. I believe she’s read the entire book so she has all of the magic she needs however, her denial mentally blocks her from using any of it. Just like her emotions kept her from seeing Sidney’s lies or others lies. She did say she was a human lie detector.
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