In the first EQ group I wrote for, everyone had created a character based on themselves, and so did I. Symbol-Maker was Barb with pointy ears. She was an artist and a dyer, average for her world in most ways. I did give her a little more angst than she had any right to, but it was very ordinary angst - she had a conflicted relationship with her family and commitment issues. She had a few garden-variety EQ-verse adventures and a love story. Her big accomplishments tended to be things like finding a new dye plant. ("Bluewort is extinct!")
Symbol-Maker was a self-insert, deliberately so, but she wasn't by any stretch of the imagination a Mary Sue. Readers liked her, but she didn't exactly acquire a fan club.
I created Arin at the same time I created Symbol-Maker. He was her mentor, and a High One, and brilliant and arrogant and snarky and passionate about salvaging as much knowledge as possible in the aftermath of the wreck of the Shell, and he had a Tragic Past and could survive in the wilderness just damn fine without resorting to diluting his DNA with nonsentient animals, thank you very much. (I may have been the first EQ fan writer with the chutzpah to create a living High One character - this was long, long before Timmain showed up alive in the comics.) Arin did not merely have garden-variety adventures; he had Grand Century-and-Continent-Spanning Quests, like the one where a couple of his old colleagues had tried to create a Mini-Shell and escape the World of Two Moons, but they were swept up in the temporal echo of the original Shell's crash and stuck in a repeating loop that would eventually Destroy The Space-Time Continuum If They Were Not Stopped.
Arin was, in short, the Marty Stu to end all Marty Stus, but he was by no stretch of the imagination a self-insert. Unaccountably, readers loved him. People asked me to write their characters into his stories. Other writers wanted to use him in their stories. I had no fewer than three people create characters to be his long-lost relatives. (Only one of them asked me first. Thanks,
dinpik.)
I'm still quite fond of both characters. Symbol-Maker was who I was. Arin was who I wished I could be.
I've created other EQ characters, like Rahirah or Tanyel or Vaynyar, who are emphatically not-me from the outset - but a character doesn't have to be based on you to be a vehicle for wish-fulfillment. I've always been terrible at anything remotely athletic, so I love writing about physically hypercompetent characters. I'm shy around strangers, so I love writing witty extroverts. I tend to fume silently about slights, so it's cathartic to write a ruthless schemer who'll exact REVENGE!
It's easy for this to get out of control, for a character to become nothing but a vehicle for wish-fulfillment. If a character becomes so much about a writer working out their own issues and fantasies that there's no longer room for a reader to slip in and identify with that character, then that writer is in trouble. But if you can remember that you're scratching your own itch, and not fool yourself that you aren't, it's a good bet that a lot of other people share those itches, and will enjoy getting them scratched as well - as long as you're willing to step aside and let them in.
The enormously important lesson I learned writing Arin, which I don't think I've ever articulated fully until right this minute, is that your Ultimately Awesome Character should never, ever overshadow the rest of the cast. They should make them shine all the more, even when the characters are in opposition to one another, like a good actor bringing everyone else up to their level. The very first Big Epic Arin Story I wrote involved him and a healer character belonging to another member of the club trying to defeat an evil disembodied elf spirit (again, WAY before this concept showed up in canon) At the climax of the story, Arin's got the know-how to defeat the villain... but it's the healer character who's got the ability to actually do it.
I'd never have the nerve to create a character like Arin in a fan 'verse nowadays (but if/when I write any original fic, I'd be strongly tempted to file his serial numbers off and sneak him into the background somewhere.) But I'm awfully glad I was too clueless and overconfident to know what I was doing way back when.