When one asks, where does the dream end, was that real, one should bare in mind the other half of the question.. Is the waking life any more real than
a dream?..
Both can be equally real, positive, or negative, thrilling, shocking, void, or touching to the observer. It just depends on where you allow yourself
to percieve from, and how you decide to react in the here and now.
The difference between a dream and waking life, from the human perspective, is that in the "real" world you have a body, which is a finite object,
subject to the conditions of the environment around it. You can get injured, or hurt, both mentally, but more importantly (to some), physically. You
seem to be at the mercy of time.
In a dream, time is both illusive and lucid. But on the plus side, you are not subject to time in that the physical reality created may seem to work
against you. You still are the observer, but you do not have a physical body as such. You can still be "hurt", in the sense that you can be
frightened significantly, but actually harm can never really come to you, because ultimately you are still yourself, just without the body.
Harm only comes when the ego can't handle the situation and bottles out. But know that this is not YOU. The ego is not your true essence. It is the
personality you take on due to your disconnection from the truth/spirit. Therefore there is no need to fight, no need to resist. Just be in the
moment, and realise you control the situation (dream).
If something or someone scary appears before you, just know they can not harm you, and be
done with it. Its when you forget you are in control the whole time that the ego suggests, puts forward, the idea, the need to be FEARFUL. The ego
does not understand the truth, because it is the seperation of you from yourself.
Dreams are no more real than you allow it to be. The next time you catch yourself in sleep paralysis, just realise that what you may or may not see
before you is probably just yourself
You mite want to have a look into sleep paralysis and Out-Of-Body experiences.. take the oppurtunity to learn about the situation you described, and
how to get the most out of that state. When you become aware of the truth of the situation, it opens up many possibilities.