When 'I' is used as a subject, why do we disuse 'I' and so create an illusion?

Question

_{Caution: I probably quoted overmuch; please feel free to omit the first few paragraphs and advise what can be omitted.
Source: pp 137-138 , Think: A Compelling Introduction to Philosophy (1 ed, 1999) by Simon Blackburn}

  Kant puts this point by talking of the "I think" that accompanies all my representations. In other words, my experiences come billed as "mine". I do not first become acquainted with the experience, then look round for the owner, and then (provided, against Hume, that this last search is successful) announce that the experience is one of mine. Rather, for me to feel a pain is in and of itself to be aware that I am in pain.
  But how is this possible, if Hume is right that we are never aware of a "self"? It is all very well comparing pains to dents, and it is certainly true that when I am aware of a dent this is only because I am aware of a dented surface. But at least we are aware of surfaces, dented or not. Whereas if Hume is right we do not seem to be aware of our soul or self.
  Perhaps the way forward has to be to deny that the "self" is the kind of thing of which awareness is possible. Wittgenstein talks of cases where we describe ourselves as subjects of experience: "I hear the rain" or "I have a toothache". He points out that in this kind of case "there is no question of recognizing a person". "It is as impossible that in making the statement 'I have a toothache' I should have mistaken another person for myself, as it is to moan with pain by mistake, having mistaken someone else for me." You cannot misidentify the subject as yourself. Wittgenstein thinks this gives rise to an illusion:

We feel then that in the cases in which "I" is used as subject, [1.] we don't use it because we recognize a particular person by his bodily characteristics; and [2.] this creates the illusion that we use this word to refer to something bodiless, which, however, has its seat in our body. In fact this seems to be the real ego, the one of which it was said, "Cogito ergo sum". "Is there then no mind, but only a body?" Answer: the word "mind" has meaning, i.e., it has a use in our language; but saying this doesn't yet say what kind of use we make of it.

We should try thinking of self-consciousness some other way. What way?

3. How do we disuse 'I', when 'I' concerns a subject? What does Wittgenstein mean by [1]?

4. How does [1] create the illusion implied by [2]?

Answer 1

By [1], he is distinguishing first-person experience from third-person experience. We don't observe ourselves (as a "particular person") having experiences, we just have experiences directly. He is claiming that by allowing the corresponding linguistic move ("I" as a subject), we can dis-identify ourselves from any attempt to locate the subject (me) within the material of the body: "I have a toothache", in common vernacular, means there is something outside of the tooth and the ache which is "me". Likewise with "I have a brain" and "I have a body". If allowed to be interpreted strictly, they entail the subject, "I", to be a bodiless entity of some sort.

But the same move can be done with even non-physical attempts to locate the subject as well. "I have an ego, therefore I am not ego", "I have a soul, therefore I am not a soul". I am not sure why the supposed conundrum cannot be resolved by requiring the less-strict interpretation: "'You' may be none of those things individually, but put them all together (and invoke 'emergent phenomena' if necessary), and ... there you are!" (Maybe.)