Either route is very derivative of TNG to be honest. I just don't like the fake/dream stuff within an already fictional story. The drama becomes too diluted. I would have preferred if it was some sort of alien influence or even if they went with the hypothesis in the episode--that the barrier between reality and fiction was breaking down (something like that).At first, I thought the episode was going to reveal that there was an alien in the plasma storm that got trapped on the ship and was tormenting the crew but I am glad that they did not go that route because it would have been too derivative of TNG. I actually found the holodeck reveal to be a pleasant twist.
Granted, it's all derivative--but I guess we each have our own preferred forms! TNG and Voyager have trained me to dread holodeck stories and I guess that's still intact after all these years!
The execution of the creepy parts was fantastic! Goes to show that you don't need a huge SFx budget to make things scary!