"Imperfect Hosts": At the House of Mystery, Cain gives his brother Abel a gift. Before he can open it however, there is a knock at the door. It is Cain's pet gargoyle Gregory holding the weakened Dream Lord Morpheus aloft by his
- It was a dark and stormy nightmare...
- — Dream
Synopsis for "Imperfect Hosts"
At the House of Mystery, Cain gives his brother Abel a gift. Before he can open it however, there is a knock at the door. It is Cain's pet gargoyle Gregory holding the weakened Dream Lord Morpheus aloft by his robes. Cain and Abel bring him inside and set Morpheus down. Dream asks them for their letters of conscription. The papers that bear his signature provide just enough power to give Dream a bit more strength. His vitality improves enough so that he can send his essence into the Dreamworld.
Meanwhile, ninety-year-old Ethel Dee visits Arkham Asylum in Gotham County. She speaks with psychiatrist Doctor Roger Huntoon regarding her son, John. John is the super-villain known as Doctor Destiny. Huntoon reluctantly allows her to visit John. Dee is in a terrible physical and mental state. He tells his mother that they "took his dreams" away from him.
In the Dreamworld, Morpheus journeys beyond the Gates of Horn and Ivory to the steps of his castle. The castle has fallen into a state of severe dilapidation since he's been gone. Lucien the librarian comes out and tells Morpheus about what has been going on in the Dreaming since he's been away.
At the House of Mystery, Abel finally opens his gift and discovers that it is a gargoyle egg. The egg hatches and a baby gargoyle spills out. Abel wants to name it Irving after an old friend of his, but Cain won't hear of it. He reminds him that all gargoyle names begin with the letter "G". He becomes so irate with his brother that he kills him, which is not an uncommon circumstance as Cain often kills his brother merely for the sport of it. Like Cain, Abel is immortal, and always regenerates. As Abel finally pulls himself back together, he consents to Cain's will and gives the gargoyle a proper name – Goldie.
Back in the Dreamworld, Morpheus visits the three witches known as the Hecateae. He needs information regarding his tools of office. The witches tell him that each one of them will answer one question, but only one per witch. These are the rules. Dream asks his questions, but the Hecateae deliberately give him misleading answers. However, he does discover where his articles may be found. His pouch of sand was last seen in the hands of a hedge mage named John Constantine. His helm was given to a demon in 1930 by Ruthven Sykes and his ruby was last seen in the presence of a League of Justice. Dream thanks these "weird sisters" and goes off to reclaim his belongings, deciding to start with Constantine.
Appearing in "Imperfect Hosts"
- Doctor Destiny (Flashback and main story)
- Choronzon (Behind the scenes) (Flashback only)
- Fashion Thing (Cameo)
- Goldie the Gargoyle (First appearance)
- Gregory the Gargoyle
- John Constantine (Cameo)
- Raven Woman (Cameo)
- Ruthven Sykes (Single appearance) (Flashback only)
- Justice League America (Behind the scenes)
- Gotham County
- This issue is reprinted in Sandman: Preludes and Nocturnes, Sandman: Absolute Edition, Volume 1 and Essential Vertigo: Sandman #2.
- This issue establishes that many of the host characters from DC's various horror anthology titles of the 1970s are denizens of the Dreaming. Cain was the host of House of Mystery, while his brother Abel was the host of House of Secrets. The Three Witches were the featured hosts of The Witching Hour and Lucien was the host of the short-lived Tales of Ghost Castle. Another character that makes a cameo appearance in this issue is that of Raven Woman. Raven Woman is later revealed to be the Biblical Eve, who herself, was the hostess of Secrets of Sinister House. Eve, Cain and Abel were also recurring characters in the humor title Plop!.
- First appearance of the Fashion Thing, another resident of the Dreaming. Like most beings who inhabit the Dreaming, the Fashion Thing goes by many different names. Her character is expanded upon in later issues.
- Blue Beetle, Fire and Guy Gardner of the Justice League make a cameo flashback appearance on the front page of a newspaper.
- First Post-Crisis appearance of Doctor Destiny. Doctor Destiny's physical appearance is radically different in this issue from how he has been presented in earlier stories, though his history with the Justice League remains intact. In Pre-Crisis continuity, Destiny was always represented as a normal adult male with striking features. In this issue, he is shown to be a stooped, emaciated grotesque being with withering hair and crooked teeth. Doctor Destiny's mother appears in this issue addressed as Ethel Dee. This is actually Ethel Cripps who was shown to have stolen the Dreamstone from Ruthven Sykes in the 1936 flashback from issue #1. This issue establishes that Morpheus' Dreamstone is analogous to Doctor Destiny's Materioptikon.
- Ruthven Sykes appears in a flashback to events that took place in 1930 in issue #1. The demon Choronzon makes a behind-the-scenes appearance in this flashback. Choronzon will be revealed as the demon who bartered for Dream's Helm in issue #4.
- Gregory the Gargoyle is Cain's pet at the House of Mystery and was a regularly featured character in that title.
- Roger Huntoon was a recurring background character from Saga of the Swamp Thing. His history is also tied to that of hedge mage John Constantine. Huntoon was Constantine's physician during the two years that he spent at the Ravenscar Secure Hospital in England. In the intervening years, Huntoon relocated to Arkham Asylum.
- John Constantine makes a cameo appearance in this issue. He is seen next in issue #3.
- Reference is made to Brute and Glob in this issue. Brute and Glob were two nightmares that often worked alongside Garrett Sanford, the Silver Age Sandman. They were regularly featured characters in Sandman (Volume 1). They make their first Post-Crisis appearance in Sandman (Volume 2) #11.
- Dream's quote, "It was a dark and stormy nightmare..." is a tongue-in-cheek reference to the phrase "It was a dark and stormy night". The phrase was originally penned by Victorian novelist Edward Bulwer-Lytton, 1st Baron Lytton as the beginning of his 1830 novel Paul Clifford.
- This issue establishes the caveat that all gargoyle names must begin with the letter "G".
- This is the first time that the Three Witches are presented as an interchangeable single entity; The Three-in-One. In previous appearances, they have always been presented as separate individuals.
- Abel is seen crawling out of his own portrait in this issue.