For in that sleep of death what dreams may come.

[Gordis]

Originally Posted by Bêthberry

So, how does Merry come to this dream? The supernatural effects of the burial grounds? The shroud with which the Barrow Wight draped him? A lingering fear trying to warn Merry? Past life regression?

Any thoughts, wights?

Fascinating topic.
I don't believe in the lingering mannish fear, and certainly not in past life memories. But I believe the Barrow-Downs, the place itself had its own memories, much like Hollin:

'That is true,' said Legolas. `But the Elves of this land were of a race strange to us of the silvan folk, and the trees and the grass do not now remember them: Only I hear the stones lament them: deep they delved us, fair they wrought us, high they builded us; but they are gone. They are gone. They sought the Havens long ago.'

Also, I think it was not the shroud, but the golden circlet Merry wore (and fingered) at the moment had triggered the memories. It likely belonged to the Last Prince of Cardolan.
Inanimate objects seem to keep memories of their own: Narsil "remembers" so to say killing Sauron, Gurthang remembers the slaying of Beleg etc... that's why heirlooms have such value. Remember how Tom took the brooch of some unknown lady from the same hoard? Perhaps it was not a simple memento, but also could induce some vivid memories?