There was a thread about this a while ago in Beyond Dreaming, i actually thought this was that thread being bumped. It had some interesting discussion take place. Check it out here.

I'll quote myself from that thread to reply to your question about using DMT in a dream, although in the quote I'm talking more about taking hallucinogens in general during dreams:

Quote Originally Posted by snoop
As far as experiencing drugs or drug effects in dreams goes, I have personal experience with that myself. Truthfully though, rarely has a time that I've ever used a drug in a dream ever produced the effect specific to that drug rather than another altogether, or at least only effects that are vaguely reminiscent of them. A lot of the time I experience drug effects I don't even take anything in the dream and I actually get a rather bizarre amalgamation of the effects of various hallucinogens I've taken in the past (mixing the effects of all 3 classes to various degrees--serotonergic psychedelics, dissociative anesthetics, and deliriants).