There's quite a bit of info out there about this topic, probably recently discussed on this list as well. I've used it to induce more vivid dreaming for years and have seen strong effects in many people. Some people have been known to wake up in the night cursing loudly and toss the pillow across the room, they were dreaming so vividly. A bundle of it hanging near your head at night works as well as a pillow of the cut and sifted stuff available in stores. It's also useful as an incense or in incense blends before any divinatory work such as tarot, rune reading etc. Just take a small amount of the dried herb and toss it on top of a wood stove or on a small charcoal disc that's been lit (available in magic stores or sometimes in catholic supply stores). Mostly I'd recommend simply getting some and trying it out for yourself. I've heard a lot of stories over the years from students who've used it.
Other herbs for vivid dreams:
Plantain- Plantago majus or P. lanceolata - tea in evening.
Watercress - Ingested at daybreak to increase dreams that evening.
Peppermint - Mentha spp. burned as an incense at sunset and thru the evening for visionary dreams.
From Dennis McClain-Furmanski (dynasor.infi.net):
Calea zacatechichi (Dream Herb) is a shrub from the Chiapas region of Mexico, related to the mint family. It has been used by the Chontal people as a divinitory for many years. Traditional use as a tea brings about a drowsy dream state, in which answers to questions are revealed and lost objects are located.
Clinical testing in double blind studies have been shown to induce sleep and vivid dreaming, with the subjects reporting profound meaning in the dreams.
Preparation is almost invariably as a tea. However, zacatechichi is intensely bitter and soapy tasting and little can be done to mask the taste (though mixture with the sweetener herb Stevia or preparation by taking Miracle Berry which makes everything taste sweet sound like reasonable suggestions). My experience has been to mix a rounded teaspoon of zacatechichi with an ounce of kava kava and preparing it as normal kava. The berries/seeds seem to have more effect, though the leaf material itself is potent.
Little empirical or pharmacologic data exists so far, one notable study being Lilian Mayagoitia's (1986) "Calea Zacatechichi: Psychopharmocologic Analysis of an Alleged Oneirogenic Plant" in vol. 18 of the Journal of Ethnopharmacology.
Please also see entry 2.10, Kava kava.