Edit: To have some content, I'll add to my theory with some explanations that I thought of a while ago.
In my theory, the reason your dream self is usually so abnormal, impaired, or broken (e.g. hands invisible, legs have blisters, arm just falls off, teeth shatter...) is because the "avatar" you (usually, if it is you in the dream) use to travel with in the dream world is made with your thoughts, as is everything. Thusly, it's a poor imitation of the human body, prone to being strongly affected - or not affected at all - by the visions and experiences in the dream world. The thoughts you update the dream world with sometimes don't entirely register and so, occasionally, the "avatar" is further affected by "laggy", broken thoughts.
Another thing: The reason shared dreams (when people in two different dreams somehow meet one another and correspond, when the dream is the same for both of them. This, as of yet, occurs only when lucid.) can happen is somewhat simply explained; it is one of the few times when people manage to meet real people, "avatars", who aren't dream characters.
Edited by Nerd-Man, 12 June 2007 - 11:45 PM.