I'm a fan so far of this. It's not really unique in what it does - as a few other lore pieces have sort of filled this niche, but I can see why you tried to fill a similar niche with this in only aesthetic changes. There is, however, a few things that I think should be adjusted to fit with LOTC in my opinion. @Mordhaundpretty much summed it up in his response. It's nigh impossible to completely stop powergaming or metagaming with a lore piece, but there are some better approaches to minimize the chance of it happening. My opinions ((you dont have to take my word for it im just putting down my two cents): Downsides and added details: Again, see Mord's response since I genuinely agree with the points he made- especially on how Dreamforging doesn't really go into the toll it takes or how any advanced usage would strain the human body or mind, nor does it touch on any real limits on the feat itself; rather it just says they cannot do [X] until [X]. Magic Slots: Since it's a magic powered from mana, I believe it would make more sense if it required one or two magic slots to have - since this is just an aesthetic thing though, I don't think it needs to require all five slots lol. The extent of Dreams and Nightmares: Dreams can be a very powerful aspect of the mind and I'd really like to see more written up about this as I feel that as the piece is now, it can be abused to abuse the mental state of someone rather than just the physical state. Furthermore, a missed opportunity I feel (whether that be because you wanted to make this simple which I also respect) is to delve into the concept of nightmares and how it'd work in this feat.
All in all, I do hope something like this gets accepted, and I'm generally unaware if anything like this already exists like in Farseer as you've stated. I implore you not to think that my opinions should be taken as fact - simply as my own opinions i'd If you do agree with Mord and I on the changes that we suggested, I'd genuinely be happy to assist you in doing so. Hit me up in forum DMs if you'd allow me to help.