Totally a normal stage where children develop the deeper sense of imagination combined with the brain grasping the concept of 'fear' ... it usually starts around 3 for more kids and can last a while depending on the child.... I agree with a consistent sleep routine, time to wind down without any TV and some nice 'cheery imaged' books.

I know one of things that has worked with some kids is helping them gain 'control' over there imaginations cause that is all bad dreams are is the brain and imagination trying to make sense of images and things in our daily lives ... the reality is that if you are having a bad dream you CAN change it yourself in your dreams by telling it to 'go away' and meaning it and so forth ... I had nightmares myself for years after a traumatic incident in my life and ended up going to sleep counseling for them cause I was getting insomnia being afraid to sleep.

Imagery is another great form for 'dealing' with nightmares and sleep issues ... as an adult one of the things they suggested for me was to write down my 'worries' into a paper and put them in a box with a lock and that was where they were to stay for the night some my mind was clear ... it SOUNDS dumb but it really does work - I do the same thing with my back pain although not as successful it does help a bit to make it 'less' painful.

With children that is a little too complex but one thing that I have suggested to clients in this position is to make a 'dream catcher' with their child, talk about what dreams ARE and how the dream catchers job is to catch the 'scary images' before they enter our dreams but if one 'slips by' its ok you do not have to be scared you just tell it in your dream 'you are not suppose to be here go away' and that will alert the catcher to come take it away again.