Some folks offer this as an option because they are too busy to sit down an draft one from scratch, or have not been asked enough to write one and really don't know what to write... Regardless, he/she has offered to write one and that is what matters. I don't quite see the "ethical" issues raised by Shamrock, although he makes some valid points and I do respect his viewpoint.
My suggestion would be to put down a rough draft together and send it in with a copy of your CV (resume) to the faculty member. He/she will then edit it based on the information you provided. If you are having a mental block in starting the letter, go back and pull some of your old letters of recommendation, ask residents for their own letters they may have saved, as well as searching for "sample letters of recommendation" on Google. I am not suggesting copying material from these sources, but to rather get an idea as to what goes into a letter.
Lastly, this is not some criminal unethical endeavor. I have faced similar situation, as have many of my colleagues... so enjoy the fact that your preceptor looks at you so favorably to make this offer.
Best of luck!