Strange mood swings.

I have recently finished my first novel; Bittersweet
Sacrifice which is just back from proof reading and ready for formatting and
printing.
While the manuscript was away for proof reading, I started
book 2; Bittersweet Humiliation.
If I’m honest; I started out with the intention of writing
something that would have the potential to earn money, however, against my
wishes, the characters have become important to me.
I am 10000 words into book 2 already and following the plot
which I had originally planned.
In book two, the heroine suffers terrible life changing misfortune.
Now my problem is; far from being the cynical wretch that
started this project with one clear goal, I have started to care deeply for
these characters to the extent that the dark plot is causing me some depression
and affecting my moods in my ‘day job’. I have the recurring feeling you have
when supressing grief, putting it into your subconscious so you can go on with
day to day matters.
OK, I laugh about it when I realise what is triggering it
but nevertheless, it’s there.
I’ve even considered re-writing the plot to take the edge
off it but feel this would be a cop out.
Do others experience similar feelings? Is there a trick to separating
the fiction from reality?
Should I even be engaging in writing if it’s going to affect
me this much?
Other author’s experiences would be welcomed.

When I wrote Ghost Orchid, I sobbed as though I knew those people and suffered with them. I felt their joy and their sorrow. The book haunted me. The swamp was haunting. I became obsessed with the ghost orchid flower. I continue to live with those characters in my mind, fashioning their futures. It's difficult separating fact from fiction when in the throws of writing.

I do know that authors who churn out lots of books become very detached, sometimes making mistakes as a result or turning over too much power to their researchers and editors.

I know where you're coming from, but I'm a cynic, a
businessman. Now I find this creative side is coming out. I’m frightened I’m
going to start getting all spiritual!

There is a spiritual quality to writing, especially when you let go and just let the stories write themselves.

When I was writing the earlier parts of A Myth in Action, my real-life hero was fighting his way through Sicily, mainland Italy, and France during WWII. He came home with PTSD, and there were moments while I was writing his story that I almost felt as though I were developing the disorder myself.

While I was outlining my fictional book, Redstone's Valley, I knew that some of the characters were going to have to die. There wasn't much I could do about it - they were swept up in my telling of this tale of 19th century Texas, and death was an inevitable part of their lives, through one means or another.

The first of those characters to go was a young woman - one I had come to care a lot about, and I stopped writing for a while because I could not bring myself to do it. When I got over it, I still chose to have it happen outside the text, and instead focused the tension on having her closest friends hear about it.

As the book went on, when someone had to die, I found that I was unable to dwell on it, and recounted what happened quickly and dispassionately. In the long run, I think it helped the story. In each case, death came quickly and succinctly, and - I hope - as a shock to the reader, and the survivors picked themselves up and got on with the business of living.

It was, after all, the 19th century, not far from the frontier.

But where my writing gets away from me most completely is during scenes of dialog, when the characters start talking to each other. I am the only one writing, but the two (or sometimes three) characters begin talking to each other and I am always surprised at what they each say - and they always stay in character. I can hear their voices and tones inside my head (yeah, freaky.).

I yhink all of our stories come from a collective unconscious, and we only relate our personal perspective of what is already there.

Just me, though

Good grief, it's taken me 3 years to reply! Where has the time gone? I know exactly where you're coming from with the character dialogue. Mine write the dialogue themselves and it's in a manner in which they behave, sometimes completely at odds with my own sympathies.
I suppose we observe character traits in others and our subconscious imagination invents the world which they inhabit, it's then sort of habitual the way they act and engage with others.
I always thought I was cynical enough to write for profit, but never guessed that I might become quite so engrossed. (I was wrong about being able to write for profit though )