These chilis are healthy, because they are high in Vitamin A, but too much of anything can be harmful. In the case of foods high in Vitamin A, you should be very cautious. Vitamin A can be instantly fatal if a bird gets too much at once. While most likely she is playing with them more than ingesting them, it is still best to limit her to one or maybe two per day.
As to her “hallucinations”, Cockatoos are known for being dramatic. They will get wild eyes, raise their crest, puff up, sway from side to side and scream as if they are seeing a ghost! This is just part of their personality, and it has some purpose in the wild. In captivity, it is entertaining and sometimes annoying. J Of course it can be a reaction to something they see through a window or even something they have taken offense to in your home. When working as a Vet tech, I arrived one morning to screams of terror from a Moluccan. He was displaying as I described above, and when I opened his cage, he fell into my arms, looking back at the wall with fear. A tiny spider was crawling on the wall behind his cage. So even something tiny can trigger these displays, but more often they are likely just entertaining themselves.
Thank you for asking Lafeber,