I have been thinking (Thinking?1 Wow!) about this for about 5 minutes, and so it must be an excellent theory! :P
Croak dreams may be some kind of population control conspiracy, to keep the citizens of Ooo in paranioa so that they don't invent any of the great things they had before the Mushroom War
The Cosmic Owl may not be able to materialize as a phsyical being to control what people create, so he invades their dreams to make them scared of doing a paticular thing, like how he scared Jake into destroying the space ship.