You're letting a skill be roughly equivalent to full casting under certain specific circumstances. However, it's quite possible to generate those circumstances yourself (invade someone's dream yourself, and then pull them into the Dreamheart to make it "real"... you even have a skill usage for that). You can easily generate spell effects beyond what a full caster can do at an equivalent level (from skill ranks alone, you're at Wizard +2 class levels, and if you pump your Wis score, the sky is the limit).
If you must keep Alter Reality, I'd suggest treating it as an illusion (Will disbelief, as it is only a dream after all).
Oh, btw and unrelated, maybe the Dreamcatcher should also stop dream stability from dropping when others fail their checks by 10 or less?