Sounds like an interesting idea. For a title, maybe something like "The Midnight Rambler," "Moonlight Serenades," "No REMs for (character's name)," "When Sleep Fails," "Balcony Ballistics," etc. Maybe one of those will trigger something for you.
As for the second half, you say you want him to move into something sinister. How about recasting (and refining) a nightmare into a monologue? If you don't have any nightmares of your own, you could check out http://www.dreammoods.com, a dream symbols and discussion site which has a forum on Nightmares and Night Terrors.