First off, different areas of the brain activate differently for true and false recognition of stimuli. That being said, dreams would probably fall into this same arena.

Fox, Wisp isn't necessarily incorrect. We do use schemas for a lot of our cognition and attention. However, limiting it to just schemas is wrong considering he neglects the phonological loop, the visiospatial sketchpad, and the central executive as proposed by Baddeley.

fedorajones is on the right track. If you factor in individual differences (we all wire up slightly different), it is doubtful that you will have your thoughts or dreams read anytime soon.

As for the paper itself, I reserve comments until I actually read the paper.