Okay this is just something that popped into my head.

What if Celestia was unable to end Starlight's nightmare?

Everyone who's seen the episode knows that Luna said that the nightmare could harm Starlight's psyche so the fic would open at the point in the nightmare where Daybreaker and Nightmare Moon are about to destroy each other and despite her attempts Celestia is unable to stop them and the nightmare progresses to the point where it negatively Starlight's psyche and Starlight wakes up.

Back in the waking world, Celestia and Luna rush to check on Starlight only to find that she changed significantly due to the effects of the nightmare. Like in the episode, Starlight's mission is successful but Starlight believes that all she did was mess it up and it's completion is nothing but luck or something like that. Twilight arrives, excited about Starlight completing her mission, and goes to congratulate her only to see the state she's in. Concerned, she asks the princesses what happened and they tell about Starlight's stress induced nightmare and the effects it has had on her.

Twilight realizes in horror that this happened because she kept putting more and more pressure on Starlight. Twilight breaks down crying about what she has done. Princess Celestia comforts her and Princess Luna explains that the damage can possibly be undone as long as Starlight's friends are there to help her.

Twilight Starlight back home to the castle so they can begin the healing process. From that point on the fic would focus on Starlight's best friends Trixie and Twilight, as well as the rest Mane 6 and Spike, working to heal the damage done to Starlight's psyche with Twilight also dealing with her own guilt.

This would be a multi chapter fanfic. As long as people are interested I will write this, although admittedly I may end up needing people to help me coming up with ideas for how future chapters play out since I'm not much of a writer. As such I'm not entirely sure what rating to give it. Or what tags for that matter.

Normally a pony can't suffer permanent psychological damage from their own nightmare, or all the ponies in Equestria would have been slowly driven insane while Luna was moon-bound. I think the nightmare was at that point like 90% Celestia's, made worse by her dream magic in Starlight's head.

I never said anything about it being permanent nor do I intend to make it permanent, I intend for it to end with Starlight returned to her normal self. Also you're forgetting what Luna told Celestia the nightmare could potentially do to Starlight which is something that can't be disregarded. I would also like to point out that we're dealing with a world that is, for lack of a better word, dominated by magic and that things don't work the same way they do in real life. Seriously, they had to physically fight somepony's nightmare and if that doesn't say something then I don't know what does. Besides I'm not going for realism, I just want to explore this possible outcome (no idea why since I almost couldn't stand seeing Starlight suffer like that, especially when she broke down crying) and write something that people could potentially enjoy reading, and I'd also like to avoid including anything that Starlight haters would get a kick out of so to speak.

6102669 Are you arguing that Nightmare Moon would've given ponies nightmares from the moon? I've always assumed that the Elements of Harmony had bound her dreamwalking, for exactly that reason.

6108016 Not at all, I'm actually arguing rather the opposite. I'm saying Luna/Nightmare Moon couldn't have affected the dreams of ponies from the moon. Therefore, ponies went 1,000 years without anyone guarding their dreams. And what happened? Nothing. Equestria still became a modern thriving civilization without a dream-walker fixing everyone's nightmares. What that suggests to me in turn is that, you can't actually suffer permanent mental damage from a nightmare. If you could, by the time Luna returned 1,000 years later, there would just be a bunch of insane ponies running around, or no one left alive.

So if nightmares normally don't drive you insane, but Starlight is in danger of going insane from her nightmare, what makes this nightmare different? The obvious answer is a novice dream-walker with powerful magic (Celestia) was messing around in her head, and probably projected her own dark side (Daybreaker) into Starlight's mind.

6108026 That's a very good point, which raises the question why Luna patrols Equestria's dreams in the first place. At least one author posits that there were dangerous dark magic creatures feeding off ponies' dreams a thousand years ago, even though there aren't now. Alternatively, we could say she uses it as a way to get to know ponies better?

(And about this specific instance, I always saw Daybreaker as exactly that: Celestia projecting her own fears into the dream.)

6108031 Totally agree on Daybreaker, though I think she was given some form of temporary life by the dream-walking magic.
I disagree with that author for precisely the reason you pointed out as well. I think Luna does it to feel useful. (It's beneficial, just not required for the survival of the realm). She's also hoping that by befriending children, she can slowly improve her public image.

6108032 Well, she could be doing it for both reasons - or, be continuing now because it helps her feel useful and make friends.

And also, as another author suggested, her befriending children means that she has more time before her friends die.