Yes i can confirm that nicotine induces very lucid dreams.

While trying to give up smoking some years ago, I went on 24hr nicotine patches, and noticed that I would experience very really and lucid dreams.. very much like films [movies] - in widescreen. They also reminded me of the dreams I would have as a child - [actually my mother smoked in the house, so maybe thereis a correlation between childhood dreams and smokers at home, rather than just childhood dreams being in your childhood.]

Most of the time I knew I was dreaming, but the odd one was such that I would wake thanking whatever that it was a dream.

Very enjoyable - and when I do have the odd ciggie, I do get top dreams that night.