I really enjoyed "Things Past". Sure, the premise of how the characters got into and out of their predicament was pretty ridiculous. But so was it in "Trials and Tribble-ations". Sometimes you just have to look past the set-up to the greatness in the rest of the episode. (Plus, see below for possible explanation.)
"Things Past" is one of those episodes best watched upon repeat viewings. The first time through you are so wrapped up as a viewer in the whole storyline of "how did we get here; who are we; how do we get back home?" that you are not able to fully appreciate the other (better) aspects of the story. And it's especially frustrating when the storyline of "how did we get here" turns out to be so stupid. I can see how one might be a little ticked off. You're like "I just invested 40 minutes into this puzzle and it turns out it was all just a dream? What a gyp."
This episode is really all about Odo's guilt. About how not even Odo escaped the horrors of the Occupation without getting blood on his hands. On repeat viewings you can really focus on Odo's reaction to the situation. He instantly knows what is going on and when and where the crew are. He recognizes the situation because he was just thinking about it in the runabout, and he feels his own guilt over the way things will go. Rene Auberjonois does his usual great job as Odo, fully portraying the sorrow and grief and restrained anger at himself and his embarrassment at having to share this mistake with others. And Kurtwood Smith does a great job portraying the younger, more sure of himself, Odo (even though he appears to look like Thrax).
Through the Thrax version of Odo, we see how Odo ran things during the Occupation. Including that great scene between Thrax (who is really Odo) and Quark. Interesting to see how those 2 guys interacted only a years after their first meeting (which we saw back in 2nd season episode "Necessary Evil"). This is Odo all the way; it just looks like Thrax because Odo's subconscious was trying to cover up his guilt.
The scene at the end of the episode between Kira and Odo plays an interesting parallel to the scene at the end of "Necessary Evil", but with the roles reversed. In "Necessary Evil" it was Odo scolding Kira for not telling him earlier that she had killed someone. Now it's Kira scolding Odo for not telling her earlier of his mistake here. Important point for the relationship between these two characters.
One possible positive thing to get out of the ridiculous "you all had a joint dream very much like the Great Link": doesn't the fact that Odo still has a morphogenic matrix suggests that he's not completely humanoid and may eventually be able to turn back into his old shape-shifter self (which happens just episodes later)? Plus, it allowed them to basically time travel without having to time travel, as TheGodBen pointed out.
OK, here's something to consider:
It's possible that Bashir has been replaced by a changeling at this point.
As Odo's body was calling out for other changelings to link with, perhaps the undercover Bashir changeling (UBC) could have linked with Odo (secretly, of course, without the other medical staff or Worf finding out) and guided the vision that Odo, Garak, Dax, and Sisko were living through. In fact, maybe it was the UBC that caused the link in the first place. Makes more sense than some random ion storm. But what would the Founders hope to gain by putting Odo through that vision of his past? Perhaps they just wanted to make Odo feel bad. Or maybe they wanted him to be reminded of the bad parts of living with the solids as a way of getting him to return to the Great Link. Or, maybe, they were just looking for a way to drive a stake between Odo and Kira. They want to spoil Odo's relationship with Kira (again so he'll be more motivated to return to the Great Link), and what better way to do that than to make Kira loose her trust in Odo?