While he would be at his "peak" inside another ponies dream he's certainly not limited to it (Via floating around like a ghost). That does bring up some interestig questions regarding dreams that i'll probably have to answer.
Such as:
1) Are dreams all linked together? Or does a Nightmare have to go door to door and "Shove" himself into a ponies mind.
2) If time works differently in dreams, can a Nightmare be at multiple dreams at a time?
3) To what extent does a dream end and conciousness begin? Could a Nightmare tamper with them to a lesser extent like he could to a fully unconcious pony?
Still, i'm glad to hear about all that good luck
.