Welcome to Dreamviews!
Yes, it sounds like you are close to lucid dreaming, because you are realizing strange stuff, that could get you lucid. I feel, what you need is a little nudge from awareness. During day, you ask yourself "Am I dreaming", then you look around, do some reality check. Pretty soon, you will ask yourself this question when in a dream and it will get you lucid. I put together a collection of methods that you can practice to get you lucid.
And yes, lucid dreaming can and is used to get rid of nightmares. Some authors of lucid dreaming books recommend to "kill them with kindness". When you encounter something scary, usually a creature, you should tell them that you love them and you don't want to hurt them. You want to help them. It's based on the assumption (an educated one), that these things are just part of us. A part, that we don't like about ourself and we are rejecting it - we are fighting it. Many dramers report, that after they declared their love towards the 'monsters', the monsters changed into something cute and nonthreatening and even 'merged' with the dreamer. Please, post or PM any questions you have. Happy dreams
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