i haven't been too focused on playing or writing music with lyrics for the past year or so, but i used to be. and i agree it is tough as hell. i think part of the reason i stopped has to do with embarrassment about how emo and personal some of the things i put out there were, and i reflected on what i was trying to do and why. as you say, creative projects can be a very important way of dealing with trauma, i think in the sense where that's something that you do for yourself and not necessarily for performance. but then again when you get to the point where it's something you've actually mastered and incorporated into your life, it can be a very powerful force in making your creative works something really amazing and transcendent and where it could maybe even help someone else, maybe not directly, but it's a way of putting a lot of heart into your project i guess. which might be like a stage 2 after stage 1: art as therapy. knaamean?
as far as tactics of creative process. i used to be in a band with an ex who wrote most of our music and her songwriting technique was roughly to come up with a bit of music, and then just kind of improvisationally sing along to it and see how it goes. so i tried to do that (i keep, or kept, notebooks of lyrical ideas that i just kind of spewed out stream of consciousness style). i feel like she got sort of locked into a self-referential style of music, though, which while pretty 'punk' kind of stopped speaking to me after a while as much as it did at first (relationship dynamics too probably a factor - bla bla....), while for me it became more about exploring and tapping into different musical traditions and learning more about my instruments and techniques and styles of playing them. so uh, do that too.
stage fright is tough. i don't think a little booze is a bad thing, but a little can go a long way...! anyway of course the most important thing is to just practice and know your shit, so that you can sort of zone out and just flow with it without thinking too much about either what you're doing or who's around. practicing is like planing a piece of wood, even when its boring you really just gotta do it over and over til it's smooth, and i think nothing relaxes stage fright as much as the confidence that comes from mastery. maybe also remind yourself that in general people are watching because they WANT to like it...