[Evisse the Blue]

Reading that, I assumed that the wights's spell forced everyone to relive the last day of the men of Westernersse and the whole dressing them up in those outfits and the jewellery served to enact the moment. If Tom Bombadil did not come to their rescue, they would probably have spent an eternity dreaming of that last battle, and believing they were indeed the men who were murdered. Why the wights were doing that is a mystery, and that's what makes it so scary.

The fact that only Merry voices it, does not mean that only Merry remembers it, or that this dream came to Merry alone. The others may have been to frightened or confused to be able to put into words similar visions they had.