I understand what you are talking about with the insominia. It has pretty much always been an issue for me. It is one of the main reasons I started using and drinking in the first place. My mind just races on about all kinds of stupid stuff. Things that happened during the day, song lyrics, past screw ups, future worries, it can be anything, but it goes on for hours. It really doesn't matter how physically exusted I am, it always takes at least an hour, sometime several for me to get to sleep. I used to have a Xanax perscription for this, but my new doctor took me off of it. I always took it as perscribed and have been on it for at least 3 years, but I can understand my doctors concerns given my addiction issues.
I used to get terribly frustrated when I couldn't sleep, but lately I've seemed to be more able to just "deal with it" and fall asleep when it comes to me. I'm not really sure why this change has come about, but I've been clean now for about 5 months, so perhaps that has something to do with it.
As far as dreams go, I have been fortunate not to have to deal with many nightmares, but my dreams in general are very vivid and I actually remember them when I get up. I know when I was using, I rarely dreamed or if I did, I never remembered it. That must really suck to desperatly want to sleep, but to be afraid to do so.
My young son has insominia and nightmare issues as well (I guess he was destined as both his mom and I have suffered from it our whole lives). His psychologist suggested several thing for him. Establish a bedtime routine. Try to do the same thing every night at the same time. It's best not to do "stimulating" things like watching TV right before bed. A bath or warm drink right before bed can help as well. Use your bed only for sleeping, don't read or watch TV there, let your body know that when it's there, it's time for sleep. Relaxation breathing or meditation can be helpful when you first lie down.
I think a lot of it is just our bodies getting used to sleeping without the assistance of drugs or alcohol. That will usually work itself out over time. Hang in there and try not to return to the drink just to get to sleep. I know I've used that as an excuse to go back to smoking time and time again, and all it did was prolong the pain. Take care.