Read this long excerpt from depth psychologist James Hillman’s 1979 book The Dream and the Underworld. My commentary and Practice recommendation will follow.

As long as dream [characters] are [interpreted to be projected] personal parts of the dreamer [i.e., my wife in a dream is not my wife in waking life; she is some aspect of me that shares my wife’s qualities, wearing her face in the dream like a mask], we must amplify with mythical parallels in order to get the dream out of personal subjectivity…. Now here is the rub: [What of the dream-ego, the dream “I,” itself?] Do we not take the dream-ego as the dreamer?
… When a [dream] interpretation addresses the dreamer in terms of what the [dream-] ego is doing in the dream, or addresses the dream-ego’s behavior in terms of the dreamer’s life, the dream is being treated on the objective level, as the actual figure of daily life. I am being held accountable for what the “I” in the dream is doing. The distinction disappears between the dayworld dreamer and the nightworld dreaming. Here precisely is the inconsistency in most dream interpretation: all [other] figures are taken on the subjective level, but the ego remains on the objective level. Although the interpreter may recognize that my car in my dream is not my actual car but images my “motoric driving,” my “wheels,” and that my sister in my dream is not my sister but the way her image affects my soul, still the “I” in the dream remains the I sitting in the client’s chair of the consulting room. The “I” remains literal and intact, never truly resolved into its own image.
So, to reach the fully subjective, a dream-worker must reach into the last pocket of objectivity, the dream-ego, its behavior and its feelings, keeping them within the image. The job becomes one of subjecting the ego to the dream, dissolving it into the dream by showing that everything done and felt and said by the ego reflects its situation in the image, i.e., that this ego is wholly imaginal. Not an easy job, for the ego is archetypally an upperworld phenomenon, strong in its heroic attitudes until, by learning how to dream, it becomes an imaginal ego.
An imaginal ego is at home in the dark, moving among images as one of them… The imaginal ego realizes that the images are not his own and that even his ego-body and ego-feelings and ego–action in a dream belong to the dream image. So the first move in teaching ego how to dream is to teach it about itself, that it too is an image.
An imaginal ego is further built by voiding its old ground… – moralism, personalism, naturalism, literalism – deriving from the corporal perspective. The old heroic ego loses its stuffing and returns to a two-dimensional shade. Then it is able to reflect its deeds metaphorically. Then it may realize that the ego in the dream is also a wholly subjective figure, who is now void of the I who lay himself down to sleep…
… the “I” in the dream is no secret stage director (Schopenhauer) who wrote the play he acts in… The dream is not “mine,” but the psyche’s, and the dream-ego merely plays one of the roles in the theatre, subjected to what the “others” want, subject to the necessities staged by the dream.
… Again, what is hard to realize is that all the persons, including myself, may be taken as masks, playing our… roles… In the drama of our dreams you and I, even if we are in the audience, are in the theater, actors all of us, dream-persons all of us, wearing the mask appropriate for the character we must play in the way we must play it.

Commentary/Practice
Remember this from The Basic Structure of Everything:
Everything about a dream – the dream-world, the dream-you, dream characters, dream things, dream events – are born whole, a single inseparable doing. You may identify with the dream-you while the dream is unfolding, but once you’re awake it’s clear that all the apparently-separate characters, locations and events weren’t really separate at all. There’s only one thing here, the dream. Just because in a dream you identify your dream-body as a separate, tangible entity “in the world,” and the dream-world of things as a self-existing reality outside of your dream-body, doesn’t make it so.
This is basically the same thing that is being said by James Hillman in this section. Dream-you does not create the dream; dream-you is a creation of the dream. Hillman credits the dream, and the dream-ego in it, as creations of the psyche.
Again from The Basic Structure of Everything:
Just like waking life.
Just as a dream is a whole experience that blooms and fades as one – DreamWorldYouCharactersContentEvents —so your life, from beginning to end, cradle to grave, waking and sleeping, is a single experience, the seamless whole of YouWorldThingness.
We only experience ourselves to be physical daytime bodies in a physical daytime world VS dreamers inhabiting a nightworld/otherworld/dreamworld because of The Human Predicament. Phisis and Psyche are unnatural partitions within physimaginal YouWorldThingness, equal consequences of the coming into being of the attention-generated self.
What James Hillman says of dreams is also true of waking life (paraphrase):
...the “I” in [waking experience] is no secret stage director (Schopenhauer) who wrote the play he acts in… [Waking experience] is not “mine,” but [physimaginal YouWorldThingness], and the [waking]-ego merely plays one of the roles in the theatre, subjected to what the “others” want, subject to the necessities staged by [waking experience].
What Hillman labels Psyche is what, in waking experience, I have been labeling essence. Every detail of life, waking and dreaming, is essence, which does not “belong” to the attention-generated self, or to our bodies or egos, whether waking or dreaming. The “secret stage director” exists but it is not us. Essence must be discovered, and, as Gurdjieff would have it, awakened.
The Practice here is straightforward. Hillman wrote above of the dream-ego:
An imaginal ego is further built by voiding its old ground… – moralism, personalism, naturalism, literalism – deriving from the corporal perspective. The old heroic ego loses its stuffing and returns to a two-dimensional shade. Then it is able to reflect its deeds metaphorically. Then it may realize that the ego in the dream is also a wholly subjective figure, who is now void of the I…
Yes, we must subjectify our dream-ego, void its old ground of moralism, personalism, naturalism, literalism, until it is at home in the dark, moving among images as one of them. This is the Practice of dreamwork.
But we must equally subjectify our waking-ego, our attention-generated self, void its old ground of moralism, personalism, naturalism, literalism, until it is at home amidst the appearances of the daylight world, moving among shifting manifestations as one of them. This is the Practice of wakingwork.
For Castaneda aficionados, these suggest dreaming and stalking, respectively.
Again a paraphrasing of Hillman:
So the first move in teaching ego, whether dreaming or waking, is to teach it about itself – You are a creation of the dream or of the day, playing roles in the dramas of the real stage director, essence.
… to reach the fully subjective, a dream-worker/waking-worker must reach into the last pocket of objectivity, the dream-ego/waking-ego, its behavior and its feelings, keeping them within the image at night or the dramas of the day– which in both contexts means refusing to mistake itself for “the secret stage director.” Neither dreams nor waking life are “mine.” The job becomes one of subjecting the dream-ego to the dream, and the waking-ego to life, dissolving it into the dream or the apparent world by showing that everything done and felt and said by the ego reflects its situation in the physimaginal YouWorldThingness of essence.
Tying this back to The Basic Structure of Everything:
Practice: Direct attention to the Manifest and Imaginal without reference to the attention-generated self. By fully experiencing our divided outer and inner worlds with indifference to how ego feels, what it likes or dislikes, what it thinks it all means, we retrain our attention toward YouWorldThingness.