I have never finished a long story -- just short stories -- but I've heard that you don't write a story. You let the story write itself. If you try to hard, it won't happen. That's essentially what Tolkien did as well. I remember in another letter that he had no idea who Aragorn was, etc. If you like, I will get the letter in it's entirety for you.
As for afraid to take the plunge, you can
always re-write. How many times did Tolkien restart LotR? Heck, how many times did he add/change new characters?
As for characters and plots getting moldy, I have no idea.
Edit: If you want good info on writing (and if you don't crude references and bad language
), read Stephen King's book On Writing. It's very good and has lots of encouragement and tips.