In my novel, the character reacts to dreams the way you'd expect someone to react: like they're just dreams. Actually, I think he makes the reader want to scream at him to take them seriously. So that's turning that device on its head a bit.
I do use my dreams as inspiration for my stories. I write my dreams down as soon as I wake up. That way I can't forget them. And I have turned a few of them into short stories.
Can't say I do, most of my dreams are nightmares and are rather mundane in comparison to my urban fantasy works...