Damn straight he should reduce his fee from $250 (is that what it was?). What's he charging now? If he's in training, he will be looking for training patients who will stay in analysis with him for 18 months and/or 2 years, unless the training organisation provide his training patients.

If you feel a good connection to him, then go with it. It's not great that he's discussing his feelings like that so readily... for instance, the coat/bag comment might be him projecting his nervousness back on to you. Who wants to know that their therapist is nervous in a session?! Perhaps it's due to him being relatively new to being a therapist and still being in training. I would be observant of it though and if ever you feel the need to censor yourself to save his feelings because of something he's said, then you know there is a problem. Presumably he's in analysis himself.

It's up to you what you talk about but generally, those feelings won't just go away on their own. Anything to do with the relationship is key in analysis and you can get more information about his capabilities by bringing it up now. i.e. how he responds to it.