There's a time for each.

One thing to remember is that for efficiency, doing a two stack is less efficient than letting a single one bloom. Rolling a three stack is the most efficient.

If you can get in a situation where you can keep a three stack going on someone that the enemy team is continuing to target it's a good idea to keep it going. Otherwise you're better off doing a lifebloom and then a rejuv if needed, keeping the option to swiftmend open.

Take this analysis of Dream state vs. Resto with a grain of salt, as last season I only made it to around 1950 (having started playing my druid in arenas only 3 months prior to the end of the season 2). I do not claim to be a gladiator or particularly skilled, but here are my observations thus far as (what I would consider) an average player. Deep or other Gladiators have articles on it already, but I think they only really explore the spec from the point of view of their own 2v2 team setups.

After giving the Dreamstate spec more than a full week of arenas (both 2v2 and 3v3) as well as a very large amount of Battle Ground play, I have to say that it is an absolutely amazing spec for Battle Grounds, and has points of interest working for it with certain class combinations in Arena. It gives you a high armor form to pop into during a focus fire to take a beating, and pre-emptively drop into in order to CC or live through a Rogue's initial strike (CCing from Moonkin just feels powerful since you normally have to expose yourself in a very susceptible caster form). The damage you dish is, of course, a negligible increase compared to a standard resto build, but the main thing I found is that Insect Swarm is really quite powerful. If I did not have to raid and could afford a respec weekly, no matter what build I chose (Resto or Dream State) I would take one that included Insect Swarm. I think the biggest thing I found with this spec is in situations where I would normally stun/Nature's Grasp and run away, I could instead drop into Moonkin and kill people I would not normally have had a chance against. The huge defensive increase coupled with the meager damage increase given by Moonkin form is just enough to really make life difficult for Rogues and Warriors (speaking from the perspective of a 1vs1 fight, which I seem to get fairly often in Battle Grounds), and I would have to say I won more of those fights than I lost, though whether it was gear, skill, or luck I would not be able to say. As for healing, I only lost about 10-15 per tick on Lifebloom and 20-30 per tick on Rejuvination while my actual healing listed (thanks to Lunar Guidance) went up by 150. In total I would estimate I only lost between 5-10% of my total healing on HoTs, but I made up for some of that when I was able to drop my Spell Hit gems and enchants for more healing gems. It was also nice to be able to hide behind a Pillar and drop both Moonfire and Insect swarm on a pet. The combination gets most pets to nearly half life, and if you hit it with another set then call your teammate in you can usually burn the pet down fairly quickly with some good CC on the opposing healer.

The build certainly has pitfalls, which is why I am going to return to my standard 8/11/42 spec fairly soon. First is that while my MP5 went up by 50, I seemed to burn through mana much faster. It was both that I was using more of it for offensive abilities (Moonfire + Insect Swarm were my bread and butter whether I was healing or nuking), and Lifebloom is our bread and butter healing spell, but does not receive any reduced cost from Moonglow. I found found what I call "On Demand Burst Healing" to be lacking in every way with Dreamstate. I lost crits on Regrowth and more importantly Swiftmend. Where I could have once dropped anywhere from 8-15k healing in seconds by burning a few cooldowns and getting some crits, those numbers were cut in half and my only option was Nature's Swiftness on a 3 minute timer. This led me to use a lot more mana on healing than I normally do, so I had to watch myself or I would blow through mana far too fast. Which brings me to my last point: Feral Charge. I found myself in numerous situations as Warrior/Druid and War/Sham/Druid where a single Feral Charge could have changed the flow of the entire battle or saved me from a focus fire while my Warrior was CC'd.

It was especially telling when I was unable to keep the shaman in my 3's this week up through focus fire with a full stack of hots, Nature's Swiftness, and the following it up by spamming Regrowth while trying to cyclone an enemy DPSer to slow the incoming damage. I am quite aware that an Enhance shaman has low survivability, but Warrior/Sham/Druid has had success above 2k with a team on my server, as have a few other teams featuring shaman, so there are certainly ways to keep them alive, but Dreamstate is not one of them. In 2's against some double DPS teams I seemed to fair much better, while against others I faired worse. SP/Lock absolutely decimated us because I lacked powerful healing and Triple stacking lifebloom plus rejuvination did not out heal all the incoming damage from their DoTs so I wound up dieing slowly with my warrior not far behind. Against Rogue teams I wished I had feral charge at times to escape (though charging a Mage can be a losing proposition unless you catch him in the middle of a Frost bolt to keep them from chain snaring). Other times Moonkin form and Barkskin saved me from getting burned just long enough to kill an opposing Rogue before I died and allowed my partner to kill his teammate afterwards. Sometimes I was also able to contribute just enough DPS right before a healer got his heal off or broke from CC to BoP or insta-heal his teammate, so having just a little bit of damage to add to my warrior's executes really came in handy for a few of our wins.

As this is a much more offensive spec, I would expect this build to perform much better in an offensive team where you focus not quite so much on outlasting as you do on burning someone at the perfect time - such as Rogue/Druid or Feral/Druid (take your pick of burst classes to pair it with). This also requires a fairly sturdy teammate that is not easily burst down (Rogue with CloS/Evasion/Vanish/Prep for example). The increased MP5 with Dreamstate for typical "outlast" teams is far outweighed by the severe lack of Burst Healing and escape ability. This is not something I would attempt with a Hunter or Warlock partner in 2's for example, and with a Warrior I found both good and bad points against a number of teams, so I would need more experience to say for certain but it felt like there was a slight lean towards not using Dreamstate in this combo. In general for War/Druid I think I can sum it up as such: Dream state is fantastic against teams that are heavy on physical DPS, and poor against caster teams. Beyond 2's I really think this build becomes more and more dimished, as the lack of healing output just cannot sustain a player through the kind of burst you encounter in 3's and 5's.

Dreamstate was quite possibly one of the most fun builds I have ever used in Battle Ground play, but unless you only participate in 2's (and only pair with bursty classes), I would honestly have to say that it is not the new "Felguard for Druids." This is the conclusion that a few people alluded to simply by looking at the spec and analyzing it a page or so ago, but it never hurts to give a unique spec a shot.

I believe this combo had the #1 spot (~2300 rating with like a 90+ win%?) on Stormstrike at some point (maybe still does, I haven't checked in a while).

Thats not really a new feature, Remembrance has been able to auto inspect arena teams the day 2.3.0 was released so I highly doubt anything is going to change that much just because Proximo added it.