I agree completely... These letters are not just some formality where you get them because they are required. This is an opportunity to have a professor you really click with to tell their piece about you, showing a new facet of who you are.
Several of the professors I asked told me to write one for myself and they would sign it. I decided to find someone else to write the thing. This is a lame way of them saying they would rather not write a letter for you and/or you're not important enough for them to write a good letter. So unless this person is in a position that carries a lot of weight, find someone who will actually write the letter.
Outside of educational institutions, being asked to write your own recommendation letter is a common practice, usually either because 1) the writer is too busy and thinks you'll be able to target it better, or 2) it's a test to see how much you'll try to self-aggrandize. #1 is definitely more likely. I'd be mildy concerned if a professor requested I write my own letter, but it wouldn't surprise me at this point, and if the professor had name-recognition I'd definitely jump at the opportunity. It's not a bad sign if they choose to do this.
When I wrote my own letter, I followed a mostly similar format to what was already posted:
-my name is ____, my title is _____, my relationship to X is that I'm _______ and have known X for ___ amount of time
-during that time, X has done lots of things, been exceedingly scholarly, worked well with others and always brought in delicious home-made cookies, or whatever. (note: I had done much for these people that they didn't know the specifics of, so this was really an opportunity to explain my accomplishments)
-in closing, I strongly recommend X to your school and think they will make an super-awesome physician
Tips on style that were helpful to me:
-Try very hard to use the person's voice, as you've probably had a chance to notice in email/assignments/conversation. If you can't do that, get a friend with a distinct style to edit it very critically.
-Find the buzzwords a person in that position would use to recommend someone and sprinkle them in liberally.
-Don't do something obvious like using flowery words when your recommender is a concise, factual writer. Don't write more than three/four paragraphs unless you have very good reasons for doing so.
-Use good judgment about personal anecdotes; not every writer likes to use them, so it's okay to leave them out in favor of pointing out your accomplishments.
-Use strong words of recommendation; don't be wishy-washy (don't exaggerate too much, mind you, just don't dither) in your praise.
Ultimately, if the recommender doesn't like your letter, he/she'll revise it to their standards. Don't hesitate because of that. The biggest mistake you can make is have it sound like you wrote it, and to damn with faint praise because you're afraid your recommender might take it wrong.