Creating your own kata sounds like rather an advanced exercise to me since I am still struggling to learn the basic Heian kata's (at the moment Heian Sandan which is an odd beast).
But Dad bought me Shotokan Karate: Unravelling the Kata for christmas which I have been reading and it's got quite a lot of interesting history about kata and the development of karate generally.
The question of where the kata derive from and why they are the way they are is an interesting one. Perhaps each student discovers it for themselves in practice.
Update: I think it's worth pointing to another article, this one by Rob Redmond, from 24 Fighting Chickens about kata applications:
Eleven years ago I receive an email from Elmar Schmeisser introducing himself as a Karate instructor with a similar background to my own. Eventually, I invited Elmar to instruct an all-day class in kata applications. His class was like nothing to which my previous JKA-style Shotokan Karate training had ever exposed me. Elmar showed us how to turn rather absurd looking two-arm positions into joint locking applications and other ways of opening our minds to the endless possibilities that the kata provided for creative interpretation and effective empty-handed application. The experience was very good for my students. One of them remarked, “I truly enjoyed that class. It was very, very violent. I’m not sure I could actually do that to another human being without throwing up.”
As a beginner I've not had much experience with applications yet although we've had a couple of fascinating classes where Sensei Hughes showed us some applications of the first couple of Heian katas. I was learning Heian Nidan at the time and I remember it being quite exciting so see how the rather stylised movements of haiwan-uke, ura-zuki, and tetsui-uchi translate into something you might do.