When I read the comic, I always took it as a given that Dream told the truth to the cat and the world had indeed been shaped by dreams and could be again.

When I watched the show, it occurred to me: It could be utter bullshit. Dream gave the grieving cat a dream to pursue (similar to, say, the dreams he gave to Madoc or took away from the cereal convention) and it didn't matter if it was real or not.