For in that sleep of death what dreams may come.

[alatar]

In regards to this quote:

Then he told them that these blades were forged many long years ago by Men of Westernesse: they were foes of the Dark Lord, but they were overcome by the evil king of Carn Dum in the Land of Angmar.

'Few now remember them,' Tom mumured, 'yet still some go wandering, sons of forgotten kings walking in loneliness, guarding from evil things folk that are heedless.'

'Some' refers to 'Men of Westernesse,' meaning living descendants such as Aragorn and his band of Dúnedain. No such thing as good spirits haunting the night, keeping evil at bay.

And no on the reincarnation as well. Merry, due to the spell of the Wight, was seeing a vision of the past. Assumedly the Palantíri can see into the past. This means that 'the past' can be 'seen,' much like watching home movies - pull one out of the cabinet, place it in the VHS or DVD viewer and - poof! - you get your vision of the past. Anyway, so Merry, while waiting to be sacrificed by the Wight, was being tortured as well by having to watch some home wight movies.