I've never had night terrors, but I can definitely relate to the suuper weird vivid dreams. Especially when depression's worse and I'm sleeping heavily, they can be so ridiculous and real feeling. I think there's definitely a big connection with depression/mental illness, and I'm pretty sure they mess with my sleep quality and actually make the hypersomnia I get worse. I know they can definitely affect my mood the next day, and sometimes I'll end up distracted throughout the day because they were so expansive that tons of little things throughout the day will jog my memory and remind me of some different part of the dreams I had. MAOIs lower REM sleep and some people say there's a connection, and I know when I was on those I'd have little to no dreams, which actually felt strange, but it was nice.

Usually mine only tend toward nightmares during certain spells, one of which I'm going through right now. I've looked into ways to treat it a little bit, too, but never found much of anything. Have you ever considered having a sleep study done?
I was just googling a bit and apparently there's a therapy called imagery rehearsal treatment that might be worth looking into.