Yeah, it's kinda vague. I need to redo it.

The concept was that the entire time "Dean" was involved, there were people already there, hidden from him that were using Alvin for bad things, and Alvin made the neighbors have erotic dreams specifically so that the Authority would catch it and investigate.

So Dean screwed up, and left thinking it was an easy case.

It was supposed to hint at a darker world behind the cheery and light one, sort of a subversion. Don't know that it worked as written.