For in that sleep of death what dreams may come.

[Bêthberry]

Wow, this thread has run on! Great to see it sparked such good comments.

I tend to agree, as Aiwendil put it, that the fundamental difference between the fates of Men and Elves would be a very strong case against the fea of a fallen Man being responsible for Merry's dream.

However, I want to add another pot to this kettle or, rather, relate these concepts of reincarnation to what Verlyn flieger callsa larger theme running through Tolkien’s major works, that the past is not just tributary to the present, but also inhabits and immediately affects it. Particularly interesting is Tolkien's use of the dream memory.

Originally Posted by Fleiger

Drawing on such concepts as Carl Jung’s theory of archetypes and the collective unconscious, and J. W. Dunne’s notion of serial memory, Tolkien in three separate
examples used the concept of dream-memory as the psychic or psychological
connector/channel between characters in the narrative present and a distant past beyond their waking memory. Two of these examples are his unfinished science fiction stories, “The Lost Road” and “The Notion Club Papers,” written nearly ten years apart but making use of the same concept and method. This treats timetravel as a psychic or psychological mode whereby two modern-day Englishmen travel back to Númenor through the unconscious memories of
a succession of ever more ancient forebears. The third example, and by
all odds the most extreme and puzzling, involves the anomalous experience
of Merry Brandybuck at the barrow in The Lord of the Rings.

Tolkien puts forth memory as the vehicle for time travel in his unfinished science fiction work. Instead of Jung's collective unconscious, Tolkien posited an ancestral unconscious and this was clearly for Men, not Elves. And his characters experience the same dream of drowning that permeated his own dreams. (It's in the Letters, which I don't have at hand right now.) Yet Tolkien's stories remained unfinished, perhaps because of his reservations over the implications.

Tom Shippy suggested that Merry takes on the personality of a body in the barrow. It can't be one of the Witch King's Men from Carn Dum, for they won the battle (which wasn't fought on the Downs, anyway, but farther north, as I recall) and Merry's dream comes from one among those who lost and who was ritually buried in some kind of royal--the golden circlet--barrow. The Appendix suggests this is a prince. Somehow, not an ancestral voice, but a voice connected by experience with the Dark Lord speaks into Merry's unconscious mind. And then, later, when Merry meets Theoden in Rohan, he speaks of his relationship to the King as like that of a father and son. I've always thought that a bit odd, responding to a foreign king with filial feelings.

Can it be that one who died at the hands of the Witch King long ago reaches out to Merry, who will worst the Witch King. Or was the memory imbedded in the Barrow Downs themselves. The Downs were a portal to the past, after all, and in LotR even rocks may have memories.