Strange. I just stuck a fire next to it and it hatched straight away. The little dino killed me first try, but I put the fire on the near side of the egg to fix that.I still don't know how to clear the World 6 level with the dinosaur egg. I've tried breaking it open, burning it, making a chicken sit on it, and blowing it around with an air vent. But even if I break it open and get the compsognathus out, the starite still doesn't appear.
Also, I thought I'd finished all the levels - just realised I totally missed world 6 puzzle! Must have gone straight from 5 to 7 by mistake...