I recommend you do precisely nothing. Leave the link as it is and in fact you should have it present on all pages (or as the case is usually in the footer) if it is meaningful to your users. Privacy policy tells Google something more about your site and it does represent an extra hint (e.g. blogs usually don't have one).
Canonicalising your privacy policy page to itself will do exactly that - tell Google that that's the correct canonical version of it and it would be useful only if you have various different URL versions of that same page.
Privacy policy page has PR4 because PR5 links to it - it's how it usually turns out (one down each link distance away). Also there is no such thing as "domain PageRank", PageRank is calculated for each individual page - with home page usually being strongest.
Given that your privacy policy does come up on the 2nd page could be due to URL length which plays role in sorting with site: command not necessarily the PageRank alone. If this page was the first page that comes up when you do site: command I would look at twice at your link structure.
As it is it doesn't sound like you have any problems of that kind.