DD wasnt born blind and thus could hallucinate.
ppl can dream when their eyes are closed. blind ppl can hallucinate. its not an optic something, its a mental sometyhing which is due to the synapses firing at a rapid rate in an area of the brain which should be at a lower level.
daredevil does and should feel fear.
In terms of DD and hallucination, even though its sensory, vision and mind related, he has very strong will power. If he were to hallucinate which was to cause him fear, his chances of resisting it would be very high. Not saying that he cant be caught at all, but given a bit of time, he can overcome it. Sometimes even easily. It does also help that hes blind which many people dont know of and their gas/illussion effect doesnt work on him.
There are a few instances i can think of where DD overcame illusions or gas that was suppose to make him hallucinate.