But what if your mind creates those characters so fully that they become self aware...

You can ask a person in your dream if you are dreaming, most of the time they will say no of course not, because they themselves are real.
If I ask somone in this reality the same question I will get the same answer.

You can debate in both worlds, but you can never fully know if it is true or if that person is just programmed to say that.

There are the rarer occasions where you find people that agree, this happens in both worlds as well.

Yes, we are dreaming.