Can Bringer of Dreams and Nightmares do real damage (destroying cities, etc) with Power X?
The answer, in general, is 'no'. If the Power says "damage" or "destroy", it doesn't matter if it also says that Dahan, Beasts, Invaders, or anything else are doing that damage, the source is still ultimately Bringer of Dreams and Nightmares and is only nightmare damage.
This applies even if the power has some other spirit doing something (eg, Blazing Renewal). If Bringer of Dreams and Nightmares played the power, it cannot do real damage.
This won't let you get around any conditional requirements in the Power's effects though. For example, if Sear Anger Into the Wild Lands destroys the last Invader in a land, a Relentless Punishment Repeat of the Power can no longer meet the "if Wilds and Invaders are present" condition in the Power's effect to add more Fear. Tags: Repeat, Targeting, Shadows of the Burning Forest, Lure of the Unknown, 8 more...