No, you're not dreaming, Cavani's agent really said they're monitoring AC Milan situation (you can find an extended but Italian version of the news here) but we're not here talking about an imminent bid to PSG or anything like that, unfortunately. The days when Adriano Galliani could make offers for players like Cavani are over, but AC Milan selling situation is attracting a lot of attentions since it seems like the new owners will have a lot of financial liquidity to spend in this summer market.
Edinson Cavani is not happy in Paris because he's not playing as much as he'd like and especially he's playing out of position (we know how you feel, Edinson, don't worry). Laurent Blanc, who's not known for his good character, sees him as a winger (right or left, it doesn't matter) and usually sends him on the field with Ibrahimovic - who's not replaceable (he's Zlatan Ibrahimovic, "the God") - and Lavezzi/Lucas/others in a 4-3-3 formation. Cavani found few minutes as a striker during the season - thanks to Ibrahimovic's suspensions and red cards - and always played well looking comfortable in that position even though he still struggles to be cynical in front of the goal (he had the same problems in Napoli), the reason why he's still a big question mark at the highest levels.
Talking about the transfer rumor again, Cavani's not returning to Italy soon - his agent said - but he's almost sure to leave PSG at the end of the season anyway. Where will we see him after the summer market? Probably in a Premier League team and at Manchester United (I think you're not surprised about that) in particular but he's monitoring AC Milan situation too. The Thai investors are in Milan this week and Silvio Berlusconi is meeting them in these days (sorry for the Italian link again) and if they came to an agreement during one of those meetings AC Milan could have the necessary financial liquidity this summer to at least make a bid for a player like Edinson Cavani (it would be an approximately € 40m operation).
I'm probably too enthusiastic about that, but our future could be really brighter than expected.