The important thing is to connect with that part of yourself that seems to be wise and cultivate it. And little by little it really adds up. There are tipping points along the way, too. Moments when 90% of mania or depression goes away. Life really does change.
It can be easy to turn practice into spiritual pride (I'm doing superior practices, the world doesn't effect me the way it does others), but as you say, that's just a defense mechanism to pretend that "stuff" isn't there. The sad thing is it works for a while, then the house of cards comes crashing down.
The thing that fixes stuff is seeing it clearly and deeply realizing it isn't helpful. Of course if it was as simple as saying that, there would be no problem. The challenge is that there is usually some positive stuff confused (literally fused with) negative stuff. So dealing with stuff means untangling things. Ironically, the way stuff gets tangled is we try to do too much, fix too much, achieve too much --- we're our own worst enemy. That's why sitting down and doing nothing except watch the mind do its thing for a while is so important.
Spirit world stuff and sensitivity can be fine. It's part of being human. Lots of meditators old and new have that tendency, too. The important thing is to find a good balance so that it doesn't turn into a blind fantasy or become traumatizing. In general, it's better to have a foundation of basic sanity and bodily health before opening up to the subtle and unstable stuff.
Yeah, we're never quite done with stuff, but as you get used to listening to your body/mind, you develop a sense of when to explore and when to stay home, when to deconstruct and when to stabilize, when to open up and when to stay closed, etc. The pattern in therapy and meditation is experience, integrate, experience, integrated... in nice manageable bites so that we don't choke