Can you interpret Cats behavior?

My father has 2 cats, one of whom is very skittish. He always hides when more than 1 unknown person is in the house - he hates the unfamiliarity, it frightens him, so he tries to stay as far away as possible until the "threat" has passed. The hissing could also be a fear response. And I've seen lots of cats play with stuffed animals the way you described - a friend's cat would do that to a toy horse and then curl up on top of it, purring.

He's just skittish; some cats are.  The louder that visitors are the more it will frighten him.  I bet that he creeps out to spy on them when everyone is sitting down and quiet.  Only time and patience will help him out.  If anyone tries to force him to come out and 'learn to deal with it' his fear will multiply exponentially.  Guests should just pretend that they can't see him and try not to move towards him, or make it obvious which direction they're going to walk...ie beginning to step slowly at first so he can see they aren't aiming to get him.  I have a jumpy kitty....she's 4 now, and just finally to the stage where she hides in my bedroom when the door bell rings and will come out to eyeball the guests in 10 minutes or so, as long as they aren't excessively loud.

I cannot stress enough that no one should try to force him to greet strangers.  He's a cat, not a chipper family puppy. 

I think some cats are just like this.
 
My girls are the same way, very shy with strangers. Ceci will run and hide as soon as a new person comes in. She will eventually make her way into the room but wont allow anyone to actually touch her. Shes even reserved with DH...I guess shes just a mommas girl!

One of my cats is that way also. Most people don't even know I have two cats! Kate even gets out-of-sorts if I rearrange the furniture. Change is not her thing.

Cats are not as fully domesticated as dogs so many retain a wariness about strange/loud/weird humans. My parents' cats, to this very day, detest me. I smell like dog. They hiss at me and avoid me at all costs. They've been raised by my parents since kittenhood (though after I moved out), but if I come over or my parents have a party, those cats are out of there.

The "dominanting the stuffed animal" is just predatory behavior. Cats are even more driven predators than dogs (dogs have a scavenging instinct along with predatory drive) and the cat is just "play hunting" with the stuffed animal. When cats chase laser pointers or strings or a catnip mouse, they are engaging in play predation.

You can read a cat's expressions like a dog's, though it's a little more difficult because cats don't have eyebrows. But the shape of their eyes, position of their ears and tail and body posture can tell you a lot about what they're thinking.

Could be that he is not used to all the noise in the house when visitor come over, plus some cat only like there own people and will not except anyone else comming into there "pride". As to the toy... some times a cat will focus on one toy as there favorite and he could be taking out any extra energy on that or he may be at the bottom of his "pride" and he is working out his frustraton on it.