This was a good read. I quite like the atmosphere you created, and the description of reading the story, the book itself and how young Fuji felt when he did so was enjoyable. Nicely done there. I felt there could have been a bit more between the actual story in the book and the point when he saw the drawing of himself in it, as the pace of the story seemed a bit too quick for my liking there (for instance a bit more on how the character felt on turning the empty pages and then realising the last one had a picture of himself I feel would have been nice), but that's my only complaint with the writing style.
I do like that you've based this on the canonical event of Lavender Town becoming a radio tower between RBY and GSC, but although I was interested that you also referenced other ghostly characters in the Pokemon games for other regions I felt it was pushing it a bit much to link them to Lavender Town as well and might have rathered you used examples more specific to the town... although I wouldn't think there would be that much to play around with anyway, admittedly.
There was the odd minor mistake here and there as well:
This book is deadlier than a curse, as deadly as the town it takes place in
'deadlier' followed by 'deadly' is perhaps a touch repetitive to use in the same sentence; consider changing one of them. Nitpicky though.
I would love nothing more than to jusf throw the book in some fireplace and be done with it.
No one would think to dishonor our late, great mayor witch accusations of bringing a plague unto our town.
with. (Unless he had been a witch...)
Without meaning too
Overall though I quite liked it, and it certainly was a creepy read. Good job!