1. Yep, daydreaming is a naturally occurring altered state of consciousness. In normal waking consciousness we can focus our attention on either internal or external events. Internal stimuli may include how you feel or your thoughts (e.g. how angry you feel or thinking about what you're going to have for dinner). External stimuli refers to things in your environment that may catch your attention. For example, listening to what your teacher is asking you.
2. What you've referred to is correct, but you could also add that the body's internal functioning is more active during REM than NREM sleep in that heart rate is faster and more irregular, blood pressure increases and that breathing is faster and more irregular. There are twitching movements in muscles of the face, fingers and toes. B/c the body is relaxed and inactive, there isn't much movements or physical activity going on with your skeletal muscles.
3. It's NOT IDEAL for researchers to deprive research participants of sleep for prolonged periods of time, but prolonged sleep deprivation has NO long lasting physiological or psychological effects. But in answer of your question, you could talk about how it's unethical to deprive someone of sleep? I'm not too sure how to answer this one as well :/ Sorry!