The dream ego is the character that you play in your dreams. It's like you, but then it isn't. You might have heard, or even said, “I don't know why, but I was following this frog around (or sewing capes for giants, or going to Mars, or visiting a gangster . . . .) In other words, your dream ego often does things that are very far from anything you would do in waking life.
Aha—that's food for thought. To puzzle out the dream ego and its bizarre behavior, ask yourself some questions: What are the characteristics of the thing the dream ego is interacting with? What is it doing, what am I doing? What is the outcome of our interaction? Here's an example:
Characteristics: Take a look at the thing you're interacting with from the point of view that it symbolizes something that has meaning for you. For example, if I dream about following a frog around I'd think about frogs. Do they represent the natural world to me, or do I see them as aimless hoppers? Are they foot-loose and fancy free or merely without an anchor? As creatures that go through readily identifiable stages—egg, tadpole, etc. —do they represent changes I'm going through? Do I expect frogs to turn into princes?
Its Action: Is this creature or thing that I'm interacting with purposeful? If so, what is its purpose? In the case of the frog example, is it leading me somewhere or trying to get away from me? Does it have a reason for its action? If it doesn't, could I imagine one for it?
My action: What does my response to the thing say about my state of mind? Okay—I'm following this frog around. Am I being led by something irrational, perhaps? Or is it rather that I'm following a natural force?
Outcome: Do I get somewhere, following this frog? Did my dream ego react in the same way that waking life me would have reacted? How are we the same, how are we different? Am I happy or frustrated? Does anything surprise me?
Above all, dream work is a quest. If you're willing to take the time to look at your dreams you'll discover your own inner treasure, the philosopher's gold.