Again, I do want to be clear, I'm not making light of or dismissing your experience. It was super-creepy to read about and it would have freaked me right the hell out too. Only twice in my life have I had a dream that was so vivid and transitioned so smoothly. I still, nearly 20 years later, remember every millisecond, which isn't true of any other dreams I've had. Still, I'm fairly sure I was in that "twilight" boundary between wake and sleep when people have sleep paralysis. A friend of mine reports trying to go to sleep one night as a child and seeing Howdy Doody dancing at the foot of her bed.
My mother, by the way, was 100% sure I had been attacked by an evil spirit in those two dreams (they both featured an "unseen force" that I got the impression was some kind of impish spirit fucking with me- both times, I could hear a child playing and laughing in the room but no one was there).