The first line says "fears" and then "delights." Which is it?
Both. Ibn Ezra (Rabbi Avraham ibn Ezra, Spain, 1100s) says the two halves of the line cover the two kinds of commandments. Fear is about the "do not" commandments: he stays away from wrong because of God, not because of what a king or other people would think. Delight is about the "do" commandments, and "greatly" means he puts all his strength into them.
Radak (Rabbi David Kimchi of southern France, who died around 1235) says the delight is real. He does the commandments because his heart wants to, not to look impressive in front of people, but out of love for the God who gave them.
The Gemara goes one step further. Rabbi Elazar (a sage of the Gemara) says the line means he delights in the commandments, and not in the reward for the commandments. The Gemara connects this to a line in the Mishnah (the early rabbinic law book). In Pirkei Avot (a Mishnah book of wise sayings), Antigonus of Sokho, an early sage from Second Temple times, says: do not be like servants who serve their master to get a prize. Be like servants who serve with no prize in mind.
So the line is not fear against delight. Fear here means staying away from what is wrong because of God. Delight means wanting to do what is right, even with no prize waiting.
Ibn Ezra and Radak on Tehillim 112:1,Avodah Zarah 19a,Pirkei Avot 1:3Tehillim 111 says God is gracious and compassionate. Here it seems to be a person. Which?
Tehillim 111, which this siddur prints right before this psalm, says "Hashem is gracious and compassionate." Verse 4 here uses the same two words and adds "righteous," but now it sits in a verse about the upright. Who are the words describing?
One reading says God. Ibn Ezra says that when troubles come on the world, a light shines for the upright, and "that is Hashem, who is gracious and compassionate and righteous." Rashi gives a reading from the Midrash: God Himself, so to speak, becomes their light, like "Hashem is my light and my salvation" (Tehillim 27:1).
Radak gives both readings. His main one is God: when there is darkness in the world, meaning trouble, light shines for the upright, and the light is relief. He adds that the verse can also be read the other way. Then "gracious and compassionate" describes the upright person, who learned from the way his Creator acts.
The two readings sit close together. Radak himself says the person learned this from the Creator. The Gemara has the same idea in another place, not about this verse. The Az Yashir prayer tells how Abba Shaul (a sage of the Mishnah) reads "this is my God and I will make Him beautiful" as "be like Him." Just as He is gracious and compassionate, you be gracious and compassionate. The same two words describe God and set the standard for a person.
One more detail. The light shines in the darkness. The verse does not say the darkness is gone. Ibn Ezra and Radak both treat the darkness as real trouble. Ibn Ezra calls the light rescue. Radak calls it relief. This siddur prints the psalm for the menorah, but the commentators above do not mention Chanukah. The link to Chanukah comes later, for example in the Sefat Emet (a Chassidic leader who died in 1905).
Tehillim 111:4 and 112:4,Ibn Ezra, Rashi and Radak on Tehillim 112:4,Shabbat 133b,Sefat Emet, Chanukah, 5661 (1900)The psalm says he is not afraid of bad news. But bad news comes. Is that realistic?
Look at what verse 7 says. It does not say bad news never comes. It says that when he hears it, he is not afraid. The verse is about what happens inside him.
Radak explains why. He does not lean on his money, his army, or his many friends and relatives. He leans on God alone. Malbim (Rabbi Meir Leibush Weiser, a commentator of the 1800s) adds that some people fear bad news because they know they wronged others and expect payback. This person's heart is firm.
The Gemara tells of Hillel the Elder (a leading sage of about 2,000 years ago). He was walking, heard screaming in the city, and said, "I am certain it is not coming from my house." The Gemara says this verse is about him. It sets the story right after a line of the Mishnah that says: if you hear a scream and pray "may it not be my family," your prayer is wasted, because it has already happened. Hillel's line is not a prayer. It is a statement of trust.
The Gemara does leave room for one kind of fear. Rabbi Yishmael son of Rabbi Yosei (a sage at the end of the Mishnah period) told a student who looked afraid that he must be a sinner. The student answered with a verse: "Happy is the person who is always afraid." Rabbi Yishmael replied that this verse is about words of Torah. Rashi adds that the fear there is of forgetting what you learned, so you keep reviewing it.
These sources do not say how to get a firm heart. They describe what one looks like.
Tehillim 112:7-8,Radak and Malbim on Tehillim 112:7,Berakhot 60a, with Rashi,Mishnah Berakhot 9:3