Something influencing behaviour, inhibiting REM sleep, causing hallucinations, that's all pretty easy to believe. You don't even need a space anomaly to mess with a person's mind, you can do that on Earth.
Making someone sing their innermost thoughts, that's trickier, but if Charlie Evans can make Spock recite poetry it's not impossible. Making them come up with proper lyrics on the fly that other people join in with, that's definitely a step above. Especially with actual choreography. But also not impossible for those folks from Plato's Stepchildren, if they'd written it out in advance and did a bit of rehearsal with their friends to figure out how it would work. And of course anyone can compose and play music, that's well within our technology even today.
Right, so what we need is powerful telekinetic psychics with a bit of prep time and a music system. Did the episode have that? No. Did it at least have an intelligent nebula with an interest in kids fantasy story books? No. Talosians? No.
I don't buy it.