Vanakkam,
Sai Baba should not be worshipped like a deity, it is your opinion, many share it, many doesn't.
The fact is, he did and said things that inspired both Hindus and Muslims, he was a very spiritual man that taught meaningful spiritual stuff to people that listened, and his teachings are still relevant to some people today.
Is it the fact that people offer Sai Baba Pûja/Abhisekam/etc... that makes you say that people worship him "like a deity" ? But there are many others that receive rituals and offerings: the ancestors, parents, gurus. Those are not deities, yet they are worshipped through rituals and given offerings.
The purpose of worshipping through ritual is not to worship the material, but to invoke the life force of the person/deity within it.
For simple devotees, it is a reminder of the presence, and teaching of a person that is inspirationnal for them. It is passing down the beautiful spiritual legacy Shirdi Sai Baba gave them.
For others devotees, they consider Sai Baba to be an avatar. This is their right to believe it so, and it is their personal practice. Have you seen them actively argue and proletize that Sai Baba should officially be treated as God by all Hindus ? No. Because it is their practice. That's all. And believing so doesn"t deny them of being Hindus.
Others people don't worship Sai Baba, and don't care what other people worship or think of him. These people respect the right of others to worship and believe in different deities and to follow their own tradition/guru/inspiration.
Please note that I'm not a Sai Baba bhakt. But I have a Baba Lokenath picture on my altar. So, well.
Aum Namah Shivaya