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In a couple of my writing projects I have used poetry to represent the dreams of the POV character. That way some of the content of the dreams and hopefully some of the emotion/feeling of the dreams can come across while still making the dreams seem fundamentally different than the character's time awake.
I am a bit concerned though that the switches to poetry and back to prose after the dream could be too disruptive to the flow of reading.
While I've never read or seen something like this myself, I actually think it's a really interesting idea! In fact, I think the contrast between the poetry and the regular writing will help readers understand the difference between dreams and reality much faster. And I think, if done well, it shouldn't disrupt the flow of reading too much. I think you should try it out and see if it flows well. If it doesn't end up working out the way you wanted it to, at least you can say you tried!
