It was never a dream, Koholint was real!
Plus, the proof is in the pudding. The final Nightmare has one eye and swings its very angry arms and shit around. WHO ELSE DO YOU KNOW THAT DOES THIS ON DRAGON ROOST.
WHO? THE MOYDUHRUH IS OBVIOUSLY GOHMA. Dethl was never Vaati or Ganon to begin with. The whole game was orchestrated by Gohma, Link's most hated enemy. Always staring at him, sending her children at him, shooting fire balls from her eye. At him.
He just couldn't deal with it.
And that's why the Tal Tal Mountain Range, and Mount Tamaranch(Wind Fish Egg) are the now known as Dragon Roost Island. Obviously.