When we first wrote about dream magic in the East Isles, we envisioned something like this: the dream world as separate from, but connected to the mundane world, sort of a heroquesty place.
That particular take on dream magic has been Gregged as noted before. What will come instead is not that much different though. Dreams are an example of something which is lower on the Space/Time/Consciousness scale than the world we see when awake. There is obviously a distinct degree of difference as well, as we don't (normally) dream when awake. However, there is still truth to find in dreams. You need to know how to distinguish it from illusions though and it can be dangerous.
The sage Sed Parad learned what dreams really are after an encounter with the great sage Mashunasan. Other sages has then elaborated on these ideas.
Currently I think the Waking Magicians mentioned in ToTRM #17 were initially mystics reacting against indiscriminate use of dream magic, which they perceived as antigod acitivity.
Later on, they turned more ruthless and adopted their enemy's methods and became what they thought they fought against.
This is all my speculation though, not to be considered as an expertly statement...
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