That sounds about right, and the place he's from is all a dream too. I've just been watching a playthrough of the game online lately, I wouldn't bother with the game otherwise. I'm not sure if he ends up fighting in the dream world too or just the real world, but he is a dream himself as you've said.
It's kind of iffy on the requirements for this thread, if the whole game has to be a dream or just have some dream sections in it.