@coz1
With regards to #3, are you sure there is only one tale being told? It seems you are going for a straight-forward interpretation (dream-state), and that's also what I picked up at first, but something seemed a bit off and the more I thought about it, the middle section could be seen in a different light dealing with a separate conscious mirror-self - which is an old tale, and an old nightmare, all wrapped up in one. I'm not sure which the author intended, but it does appear to me that at least two tales are being told.
With regards to #3, are you sure there is only one tale being told? It seems you are going for a straight-forward interpretation (dream-state), and that's also what I picked up at first, but something seemed a bit off and the more I thought about it, the middle section could be seen in a different light dealing with a separate conscious mirror-self - which is an old tale, and an old nightmare, all wrapped up in one. I'm not sure which the author intended, but it does appear to me that at least two tales are being told.