I am curious about the concept of tzimtzum in the creation of the physical/spiritual universe. If God can constrict Himself to make room for creation, why can He not also use the same concept to become a man, a rock, or an angel?
Your question is based on understanding tzimtzum to mean constricting, that God drew inward and made room for the universe. Unfortunately this is a common misconception.
Rabbi Chaim Volozhiner, in his book Nefesh Hachayim, specifically states that this is not the meaning in our context of tzimtzum; rather it means "hiding." He cites examples where the word tzimtzum means hidden and hiding.
The idea is that from God's vantage point, nothing exists besides God, and nothing can exist, because He must will it into existence. So in essence everything is just a manifestation of God. I imagine it as if the characters in your dreams would perceive themselves as real. Tzimtzum is a hiding of God that enables a creation that "feels" as if it has an independent existence.
The Nefesh Hachayim states that we cannot, and should not, try to delve into understanding the nature of tzimtzum, or God before tzimtzum.
This is an example of how studying books of kabbala can cause harm. Kabbala is easily misunderstood, which can lead to believing in a corporeal God. It can bring a person to not performing mitzvot if he understands that we do not really exist and the whole Torah is just a hiding of the "real" reality. Or it can be taken to the other extreme, that if God is equal everywhere, as in before Tzimtzum, then there can be no difference between holy and unholy things and places, because all existence is really God himself. This can lead people to incorrect behavior, as Rabbi Chaim Volozhiner bemoans in his work.
