Oofta
Legend
Feel free to run it any way you want. I think it's quite clear. It's true that you don't have to get access to the 2 free spells per level, you don't have to put them in your spell book. There's nothing in the text to indicate that you automatically prepare them, which you have to do from your spellbook.There is an ambiguous overlap.
"Each time you gain a wizard level, you can add two wizard spells of your choice to your spellbook."
I rule that the player can prepare from these new leveling spells directly, that the player "can" add, before going into the spellbook, but lose any excess spell.
I don't think it's a reasonable reading of the text but it's nothing I'm going to argue about. It's just a weird edge case red herring anyway.