"Happy memory" thing is easy to explain in mentalism way. (Almost) everyone has that friend from the past which reminds of some "good old days". In this case it's childhood. Red John has Patrick very well researched, so finding such person wasn't a problem. It's plausible (like everything in the show) and you don't need any mind reading skills to do that.

My theory (or should I say hopes) about Red John is that he's Brett.  Everything else would be disappointing, because I don't think that Heller and producers can come with something that will suprising and... good. I hate that Red John evolved from normal serial killer to some Moriarty style villain with hundreds of accomplices who are ready to die for him without any hesitation, and I'm afraid that ending could be so twisted that it will be just overdone (i.e. "Lost", clearly writers just didn't know how to end the show and resolve that tons of mysteries!).

And one funny thing about season finale - why the heck they transport such a valuable convict like that woman from social services who was RJ puppet in such ordinary way? If they knew how important this person is and about suicidal tendencies of RJ friends (and they clearly did know!), they would never let her be transported only with one cop and without any protection from commiting suicide. "Mentalist" has often problems depicting CBI and police work...in real life there's no way that they would let so many witnesses so easily die. There's offcourse more lapses such as how it's possible they didn't pursue the plane from "Red John's Footsteps" (I think they could easily get to this plane and the pilot) or didn't have RJ on tape when he come into CBI offices or around the building (in one episode there was a footage he did from his car - at least they should try to find that car)? There are no cameras around (he was also in a shop stalking Darcy)?