I like how its different than a normal poison. Makes things more interesting.
Sounds like we're good to proceed!
Updating
Working Draft.
I'm starting to suspect its Strength is too low. I'm thinking it needs a Strength of at least 10-11, so it doesn't have a damage penalty.
How about making it a Medium-sized creature with Str 10 and Dex 11? That's a close match to a Medium Monstrous Spider; which has 2 HD, Str 11 and a 1d6 bite.
If we make it 3 to 4 feet long, half the 8 foot bodylength of the Large Phase Spider, the Dream Monster can still credibly stand 2 feet high and be Medium sized.
Finally, I'm thinking we ought to give it a Wisdom of at least 13, since that's what a Phase Spider has. Charisma 16, for the sake of argument?
Putting that together:
Medium Aberration
Abilities: Str 10, Dex 11, Con 12, Int 12, Wis 13, Cha 16
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Advancement: 4-5 HD (Medium); 6-9 HD (Large)
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A typical dream monster has a body 3 to 4 feet long and stands roughly two feet tall. It weighs about 80 pounds.