It's not correct according to traditional grammar
It might depend on what you mean by "proper English". Based on the context, I'm assuming the clause is meant to express the same idea as "You already know me."
The traditional prescriptivist answer would be that the quoted sentence is not "proper English". This kind of word order (Object-Subject-Verb, or OSV) can be used for emphasis, but changing word order like this isn't supposed to change the form of the pronoun, which still functions as the object of the clause. So "Me you already know" would be correct in "proper English", which makes "I you already know" incorrect—from a certain (not uncommon) viewpoint.
You could stop here. The rest of my answer will be about why I'm hesitant to say that it is incorrect/improper regardless of viewpoint: I'm not sure based on the context that Pratchett intended for it to sound incorrect, and there is some attested variation in the usage of I and me that certain linguists view as falling inside the boundaries of standard English. The quoted sentence certainly shows a very marginal usage of I, but I feel like it could be related in some way to the less marginal areas of variation that I discuss below. And even if we just categorize the usage as improper, I'm interested in the question of why I might have been used here.
Actual usage of I and me is somewhat variable in some contexts
In traditional grammar, I and me are described as the "nominative case" and "accusative case" forms of the first-person singular pronoun. "Nominative" and "accusative" is terminology derived from the grammatical description of Greek and Latin, in which many nouns and adjective have distinct forms for these two "cases". Modern English is descended from a language with cases that worked similarly to those of Latin, but in present-day English, the original distinction between "nominative case" and "accusative case" is only visible on some of the pronouns. (Actually, the modern English "accusative case" represents a merger of the Old English accusative case and dative case, but that's an additional complication that's not relevant to your question.) Because of the way English has developed, linguists have questioned the applicability of the traditional terminology and concepts to modern English grammar.
The use of the remaining distinct pronoun forms has also changed over time. In some contexts, we see a certain amount of variability between the two forms, despite the prescriptive tendency to identify one form as "correct" and the other as "incorrect".
One area where such variation is well-known is coordination. According to prescriptive rules, it is incorrect to use ...and I in place of ...and me, but it still sounds OK to many English speakers to use I here. This use of I is common enough that some linguists argue that it is an established variant usage within the range of Standard English. See F.E.'s answer to Between you and (“me” or “I”)?, which cites the Cambridge Grammar of the English Language (CGEL) by Huddleston and Pullum and also mentions less common constructions that CGEL calls "hypercorrections".
Another context where we see some variability is before a relative clause that has who as the subject: it is possible to see ...I(,) who being used in place of me(,) who.
I haven't read about variability in sentences like the one that you quote, but to my ear, the use of I in this context seems similar to its use in the other contexts that I discussed above. The unusual word order makes the use of I not sound particularly jarring to me, but other people might have different reactions.
I know of a possibly related example of unexpected "nominative case" on a fronted pronominal object (but with "incorrect" usage of he in place of him) in Jane Austen's Pride and Prejudice (unlike the Pratchett sentence that you quote, the Austen sentence also contains one of the environments I mentioned above, as who follows the pronoun):
He, who had always inspired in herself a respect which almost overcame her affection, she now saw the object of open pleasantry.
I first saw the Austen sentence brought up in a related question and its comments: Why the use of objective form?
It doesn't strike me as a very plausible "pidgin English" form
I wouldn't think that an author would be likely to use "I" instead of "me" as a way of characterizing a pidgin form of English. The usual stereotype would be that such a speaker would instead use "me" instead of "I" (e.g. "me no see them" for "I didn't see them").
Comparing it to other errors in the speaker's English
I Googled the book passage glanced at the area near the sentence that you quoted. So far, I didn't see any errors in Butterfly's sentences: maybe you could add a quote showing that?
Lotus Blossom is depicted as making the following kinds of grammatical errors in English ("Morporkian") sentences:
incorrect verb agreement: "Then it are true", "Rincewind, he say . . . Goodbyeeeeeeeee—",
incorrect use of singular forms: "Indeed, I am all ear"
Unfortunately, what I've seen so far doesn't seem much use in answering your question.
Update: sentence production errors and commas
I talked above about the possibility that this usage could be related to other, better-attested variation in the use of I and me. There is fairly good evidence that in some contexts such as ...and I, the prescriptively incorrect use of I is used frequently enough by some speakers to constitute a pattern of usage rather than a one-off slip of the tongue or pen.
But it's harder to find examples of I being used in contexts like "I you already know...." In previous drafts of this answer, I neglected to talk about the possibility that the use of "I" in this sentence is some form of production error, where Pratchett inadvertently used a form that actually wasn't grammatical at all for him. A typo is unlikely, but it could be an error in putting the sentence together based on mental interference from other sentences with similar meaning. It's not incredibly rare for speakers to produce sentences that are syntactically malformed for that reason, although this is less expected in written text.
I think some comments have indicated possible sources of interference that could have caused Pratchett to inadvertently produce an ungrammatical sentence:
The second clause in the sentence has a copular structure: "these two are Lotus Blossom and Three Yoked Oxen". In anticipation of this, "I" might have been used in the first clause, as if it had a parallel structure along the lines of "I am..." (Joshua Taylor's comment is I think making this point).
Kate Bunting pointed out that the clearly grammatical "I am already known to you" would have the same meaning. Possibly, "I you already know" comes from blending the two grammatical sentences "I am already known to you" and "Me you already know".
Some other comments have suggested that a comma might improve the acceptability of the sentence, although I can't think of any reason why that would be the case (zwol, and also BruceWayne, if I'm reading the latter comment correctly).