My daughter was about 8 or 9 when this happened. Recently, while talking to my brother-in-law, who happens to get sleep paralysis, I mentioned that I myself had transitioned my own sleep paralysis into OBE's. My daughter was right there and she didn't give much of a reaction (she was just kind of like "hmm"). She's a pretty cool and mellow kid so I didn't expect that she would freak out.
As far as the nightmare/being scared issue with your child, when my daughter was getting used to her own room and was fearful, I gave her an amethyst to put under her pillow. This was great comfort to her as it always was to me.
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