There is no need to apologize. The thoughts and ideas presented in your letter seem indicative of psychosis. Please keep in mind that I cannot know that with certainty because I am basing my opinion on a short letter with limited details.
You asked whether or not your specific symptoms (i.e. difficulty distinguishing dreams from reality) is a “normal” aspect of psychosis. Yes, the very definition of psychosis is having a break with reality. Many people describe their psychotic experiences as their having difficulty knowing what is real and what is not. That, however, does not rule out the possibility of another problem. Alternative explanations for your symptoms may include an undiagnosed medical condition or a sleep disorder.
You did not mention whether or not you are taking psychiatric medication. If not, you may want to consider it as an option. Antipsychotic medications can reduce or eliminate psychotic symptoms. Understandably, some individuals are reluctant to take psychiatric drugs but a low dose might considerably improve your symptoms.
I would recommend being evaluated by your treating clinician and/or a medical doctor. You may also want to inquire about a sleep study. Your symptoms require treatment and they should not be ignored. An evaluation can uncover what might be wrong. Please take care.