Pokeballs will work in the dream, and the Pokemon will be the real versions! For this reason only Pokemon that characters actually have with them, balled or not, will be able to appear in the dreamscape.
We can't really elaborate on the specifics of this, unfortunately, but it will involve that character dying in some form. If the trauma of dying would be too heavy for your character right now, we wouldn't recommend going for that option.
Re: QUESTIONS
We can't really elaborate on the specifics of this, unfortunately, but it will involve that character dying in some form. If the trauma of dying would be too heavy for your character right now, we wouldn't recommend going for that option.