In junior high, one of my classmates was like this. Something had happened to her (it was probably rape of some kind, we never managed to find out though) and she went completely nuts. There were psycho-stalking ex-boyfriends, one, sometimes two, children of hers sent off to London for protection, shoot-outs on airports and so on. Crazy stuff. At the same time, she managed to do tolerably well in school and if you only knew her superficially, she'd seem perfectly normal. The scary thing was, she obviously believed in the world she had created. Sometimes' we'd confront her about the more outlandish things, but she never crumbled. It was her strong faith in her own stories that kept us fooled for so long, and it was incredibly hard to stop believing in her and to stop playing along. For what it's worth, my advice is to pretty much ignore the crazy stuff and try to steer conversations to the mundane here-and-now things, like work, current events, common friends, even the weather.
I think the dream things are pretty telling that something is wrong with her. A sane person would not put so much stock in their dreams. She seems to blow the coincidences you describe between real life and her dreams way out of proportion. Sane persons would rationalise dreams about an ex killing people to mean that they probably obsess over their exs too much, or something like that. In any way, they'd interpret the dream to be about themselves and their mental state rather than being about unknown outside events. So my vote is that she is nuts. Not "alien voices told me to kill the president" nuts, but not far from it. And you are not callous or cynical.
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