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Fenoglio is the author of Inkheart, and by some strange coincidence, he lives in a small Italian village not far from where Capricorn's settled down. To Meggie, he looks old and distinguished: "in his mid-sixties or even older. His face was wrinkled like a turtle's, but his hair was black, without a trace of gray (she was to find out later that he dyed it), and he didn't look at all fragile" (24.9). He also has "an impressive nose" (24.72), which just might be a metaphor for his excellent ability to sniff out a story.
So when Mo first meets him in order to ask whether he has any copies of Inkheart laying around, it makes sense that Fenoglio insists that Mo tell him the whole story, saying, "'I can smell a good story miles away, so don't try keeping one from me. Out with it!'" (24.40). Yup—Fenoglio's like a Bernese Mountain Dog when it comes to excellent tales.
Along this line, Fenoglio also can be pretty convincing when it comes down to getting what he wants, especially when there's a story involves. For instance, Mo hesitates to tell him about the whole Inkheart thing at first, since he'd promised Dustfinger he'd leave him out of it and all, but Fenoglio's response is: "'Keeping a bad promise makes it no better'" (24.50)—and this effectively persuades Mo to spill the beans.
Fenoglio is in a pretty powerful position in this book, what with being the author of Inkheart and all, so it's a good thing he's clever. He successfully convinces Basta that he'll put a curse on Mortola if Basta brings him some paper and a pen, a ruse Basta buys hook, line, and sinker, and that enables Fenoglio to actually write alternate endings to stories in order to swing the balance in favor of the good guys.
Fenoglio clearly cares about his grandchildren, and when Meggie and Mo visit his home, they see him playing lots of games and taking care of them. When Capricorn threatens his grandkids, "fear showed in every wrinkle of his face" (34.49), and when Meggie is freaking out about whether their plan to change the Shadow will work, Fenoglio comforts her by saying, "It will be all right, Meggie! […] You're not alone, even if you may feel so tonight" (53.34)—and in doing so, becomes a bit of a grandfather to our main girl too.
Fenoglio vanishes into the book when the Shadow unforms, so we don't really know what happens to him after that. Resa writes to Meggie about it, though, saying, "Don't be sorry for Fenoglio. It's not a bad story he's landed in" (59.9). Besides, since we know how crafty Fenoglio is, we imagine that he's using his knowledge about the land he wrote into existence to his advantage.