jQuery plugin to highlight text spans in various colors
The example you posted makes no use of inherited behaviour as far as I can tell, and can be implemented as the example below.

I think however that you are preparing for something that this example does not showcase, since you're asking about delegated implementations.
It's hard to tell what exactly you are aiming for though, so for now I'll just supply the simplification of your example.

;(function($, window, document, undefined) {
  "use strict";

  function show(elem, settings) {
    $(elem).css("color", settings.color);
  }

  function hide(elem, settings){
    $(elem).css("color", settings.normal);
  }

  var defaultSettings = {
      color: 'blue',
      normal: 'black'
  };

  function setHoverHandlers(elem, settings) {
    $(elem).hover(function() {
      show(elem, settings);
    }, function() {
      hide(elem, settings);
    });
  }

  $.fn.myPlugin = function(opts) {
    var elemSettings = $.extend({}, defaultSettings, opts);

    return this.each(function(id, elem) {
      $(elem).children('span').each(function(_, elem){
        setHoverHandlers(elem, elemSettings);
      });
    });
  };
}(jQuery, window, document));


As a side note, I generally discourage the use of Object.create, in favour of using plain data structures and functions working on them, or encapsulating state using closures. Crockford elaborates on it in this talk.

As another side note, it's funny that Crockford holds this talk, when he is in fact the single reason thatObject.create is in JavaScript in the first place. It was literally added to the standard after him nagging about it long enough.