We Only Dream of People We've Seen Before...How Do We Know?

I don’t like this face at all. I hope I won’t dream of it, it’s going to be unpleasant.
Regarding the OP, the only reason I can imagine that would explain this alleged effect would be that face recognition is very complex and our brain would be unable to create a new one out of whole cloth. And in fact, when I try, I can’t manage to create a mental image of an unknown person (while I can create the mental image of a variety of monsters). Can you? (I guess an artist like a painter could do that).

I have here an extremely detailed and complete brain simulation, and it does in fact have dreams. I have not yet, however, had any success in enabling anyone else to monitor them. It’s a lot harder than you think.

I hope it’s not true, otherwise all the movies where the man meets a woman he saw in his dreams he’s fated to be with lose all their credibility

I’ll offer a variation of the OP, which I think is true:
We only dream about ourselves.

No matter how weird your dream may be, (populated with strange one-eared midgets, or 5-eyed dogs,or aliens) you are always a main character on stage in your dream.
You meet them, and you interact with them.

In your dreams, you don’t just watch like a spectator at the theater–you take part in the action.

It would be interesting to know why.

I have many dreams where I am merely an observer who is not taking part in the action. Maybe 5 to 10% of the dreams I remember upon waking.

Of course it will. All intelligent beings dream. Nobody knows why.

One time I dreamed of two ogres fornicating.

I’ve never met an ogre.

But the claim is not that you know the person in real life, just that you have seen the person at some time in real life. You could have passed the person in the mall without ever speaking.
The claim is ultimately bogus, and it is a stupid idea, but your statement doesn’t demonstrate why.