She is of course exhibiting breeding behavior and has adopted the bottle as a surrogate mate and egg. If she has been doing this for several weeks, then it’s probably best to take it away from her. The breeding cycle needs to be disrupted. Try rearranging the cage some and get her some new toys to distract her when you take the bottle. Do not give her anything to shred, and when she is out of the cage, she shouldn’t be allowed to roam the house or get into small, dark places. When you pet her, limit it to head scratches. We have learned that when we pet a bird all over the body, this triggers hormones in the bird because normally only a mate is allowed to groom the body I know cockatoos are fun to cuddle, but once they get like this, she is at high risk of becoming a chronic egg layer unless you make some changes. It may seem harmless to let her keep the bottle, but she can get obsessed with it and get to the point where all she wants to do id sit on it rather than interact with you.
Thank you for asking Lafeber,