One common theme could be loyalty. Given the nature of Daryl Dixon's character in the original show, loyalty to friends or comrades like Gene Dixon and within the context of Trinity might be a big part of the fan fictions.
Daryl Dixon isn't gay in the comics. The storylines mainly revolve around his adventures and struggles in a post-apocalyptic world, not his sexual orientation.
It depends on their popularity and the creativity of fans. If people are really into their characters and potential relationship, fanfiction could definitely exist.
I don't think Dixon Hill is a real novel. It could be a name given to a fictional work in a movie, TV show, or game, but not something you'd find on the shelves of a bookstore as a genuine novel.