In my case HH is visual and hearing hallucinations. It occurs to me when I falling asleep while trying to maintain consciousness (eg. by listening to music or expecting HH). At beginning of HH, I see just flashes of images. As falling asleep goes on, these flashes develop into vivid moving scenes (like being in dream), sometimes accompanied by sounds (buzzing, beeping, music) raising at volume.
HH can be used to enter into a dream.

First, is 'Sleep Paralysis' when you are paralyzed inside a dream? or just after waking?[/b]
Sleep paralysis (SP) is when you wake up and are unable to move.

See also these topics on Wikipedia:
HH - http://en.wikipedia.org/wiki/Hypnagogic_hallucination
SP - http://en.wikipedia.org/wiki/Sleep_Paralysis