Anyone own Canaries?

Because i have lots of questions!

im an all around animal lover, but i didnt realize how cool birds were until i inherited a male canary from a friend of mine. ive never owned a bird before and im finding out that being a bird owner is actually a lot of fun! but i have some questions that my canary book didnt answer.

question #1 do birds dream?
because i think Twitter the canary does. i know my dog dreams because she moves her legs and whimpers, and this morning i was awake around 4 am and i sware Twitter was dreaming! he was all puffed up, squatting on a perch with his head burried in his wing, and softly chirping then would click his beak. i dont know what else it could have been, could this be maybe beak grinding? it went on for about 15 mins. i find it so interesting that a bird could dream, but i dont know if its possible.

Question #2 will he eat Presillia?
i have a hermit crab, and i let Twitter fly around and explore when im in my bedroom with him. do you think that if he ever figured out that i have a hermit crab that it will try to eat it? Presilla doesnt do much but stay in her hut during the day, i dont want her do be in danger.

Question #3 how important is the cuttle bone?
he doesnt seem to interested in his cuttle bone, theres a few pecks in it but Twitter barely touches it, is that a problem?

Question #4 i some times burn incense, is that bad for him?
im talking like, once a day, maybe twice.

Question #5 do birds get stage fright?
he will only sing when there is music playing
he will tweet when there isnt anything on, but when i play any rap music, he sings beautifully! whats up with that?