Hm...I'd like to take your plot and summarize it to my liking, if you don't mind.
Prologue
A few months after the events of Koholint, Link returns to Hyrule after determining that Ganon could not be revived. However, little does he know that the Nightmares have taken refuge inside him, and thus Link is tricked into retrieving the Triforce from safekeeping, in the Temple of Time (Or some other place).
After Link is in the presence of the Triforce, the Nightmares put him into a deep slumber and, using Link, demand that Koholint be restored not as a dream but as a real place. The Triforce pieces together memories from Link's mind and restores what it can of Koholint. The Nightmares have other ideas though. They craft their own versions of Koholint and fuse it with Link's memories.
And so it was that Koholint came to be, existing as a large island off the coast of Hyrule. But all is not well. While the Nightmares have their home back, and while it is no longer a part of the Wind Fish, they lust for more power. They demand one final wish from the Triforce, to be able to live on their own and not need another's mind. Together, the four Nightmares set out to conquer Hyrule, leaving Link in eternal slumber in the depths of the Temple of Time.
Present
Link wakes up in a bed. Marin is smiling down at him, and once again he mistakes her for Zelda. Confused, he asks what happened. Marin tells how Koholint is back, and how Hylian soldiers came to the island to explore and took her back to Hyrule. Link's uncle is also present here, and he tells Link what he must do.
And so the adventure begins. Link, confused and dazed, must solve the mystery of exactly what the Triforce did, and destroy the Nightmares once and for all.