To the point I won’t even read his dialogue anymore? I hope that’s not the intention.
No, not to the point where you don’t read the dialogue, but maybe you’re just not getting the joke, or your sense of humor doesn’t jive with the author’s (and mine). I certainly don’t have the problems you do.
I know it’s supposed to be funny, but HOW do you explain that in-story??
I think your roots as comic-book fan are showing. 8p See, I never got as bothered about “canon” and “in-story explanations” as comic-book people seem to be. Part of OotS’s charm is its breaking the fourth wall, but it’s very difficult to do that and still be serious. So essentially what you’re saying is you like the fact that they break the fourth wall, and you don’t mind that they become serious, but you do mind that they suddenly stop breaking the fourth wall. None of that adds up. The humor of OotS is very much predicated on that fourth-wall breaking, so if you admit they’re allowed to change moods, then they should be allowed to insert that stuff wherever they like.
My fear is that the whole epic, after a LOT of posturing, might be resolved by a similar gag: "Hey Bad Guys, the Author called and said you have to lose. " “Oh, OK then.”
There’s a major difference between humor and cop-out. The diamond is an extremely minor piece of story, which is only in there because the actual D&D spell requires it. The author has never, to my recollection, used his fourth-wall-breaking to actually influence the plot in any major way, unless you count Elan’s abilities, which have more to do with being Genre Savvy than that.
Heck, even Final Fantasy, whose series WERE supposed not to have any intercontinuity, has ended having flame wars between fans over the silliest details. Black kettles and all that. 
