Was this all a dream?

No, it wasn't a dream, unless....

What gives it away as not being a dream is the presence of Holly Body (Melanie Griffith) observing the filimg of the scene in the vampire movie right at the end. The presence of this major "real person" from what otherwise would be a dream demonstrates the reality. That is, someone you've dreamt up can't actually appear in real life.

The main alternative is that he knew her in real life and thus included her in the dream. hyy would she be at the film scene though? But that's going too far. There's nothing to indicate that at all.

The "dream" part is what goes through his head as he's in the grave that's been dug and is experiencing claustrophobia.

I also had that take as I watched this last night. The whole movie was just so bizarre that it could have been taken in that direction. What a list of strange characters with weird ways this movie has! I'm still not completely sure that it wasn't the terrified actor's mind getting extremely imaginative as he fought his claustrophobia.

It is not a dream. In the last scene you see Holly Body and the directors says to Jake I am glad I fired that other guy. Remember he fired Jake in the beginning of the movie. I part where he was in the grave was the only dream sequence.

Not a dream, but I did suspect for a minute, in fact I'm still entertaining the idea a little, that it was all just a movie Jake was making. It probably wasn't, because during the end credits we see him still filming Vampire's Kiss*, and he couldn't have filmed another thing with the same director at the same time. It probably was just Jake's coping strategy with the tensed claustrophobic real life moment, him imagining that he has to beat his fear and act to keep his job, resorting to a familiar setting to make sense of an insane real-life story.

...But I still liked the hell out of that little feigned fourth-wall breach.

* funny coincidence, a Nicholas Cage flick called Vampire's Kiss came out 5 years later

there's a highway that is curling up like smoke above her shoulder

The movie isn't really all that bizarre. Maybe it takes a couple of viewings. But no, nothing so abstract as "this part was all a dream" happened. He just had thoughts of "I've got to act, I've got to get this right" when he was down in the grave, and he was relating those thoughts back to what got him fired from Vampire's Kiss.

The last scene of the movie is not him at the film set, but him and Holly at the newly dug grave just after Sam's dog pushed him into the water and disappeared.

So there is no indication for me that the movie was all a dream.

I'd rather say that Jake's mind connected his shock at the real grave with the shock he had at the film set (also a grave). And he realized that while at the set he could just back out, now in real life it was do or die.

(Grissom): -Are you a terrorist?
(suspect): -Depends, are you terrified?