Sounds like progress. :) I am not the WILD expert but I believe that if you try to consider such distracting noises as part of the dream world it could help...I have seen similar advice before from Sivason who also recently defined the difference between HI and dreamlets in one of his posts. Yours above sounds like a dreamlet which it sounds like is closer to REM dreaming per his definition. I can probably dig it up if you are interested. Either way, like Sageous says, try to not get excited or pay any attention to "the noise" as he calls it. I think it is progress though. :)