is that your way of showing you agree or understand with my post?
I understand your post. I don't agree. I somewhat trust my perceptions and I think that a real world exists outside of our perceptions. I'm an existentialist I guess. I was quoting the famous Taoist story because it somewhat agrees with you. Tao is very interesting and I think you would enjoy it and indeed most Eastern philosophy.
Your questions are hard ones but I will do my best to anwer them:
1. What limits our minds while we are "awake" and/or "alive"?
I would say that it is our minds that limit our minds. We have these perceptions that our brain treats as true won't allow our minds to alter from those perceptions. This falls well into Taoism as we should bend with the wind instead of standing against it - if we want to find "the way" we need to discard our so called "knowledge" and open our mind completely - away from knowledge and thought and speculation.
2. How does death fit into the picture? some believe an afterlife exists. the afterlife, is of course an extension, or a release, of the mind from the observed universe. but what about those who don't believe in the afterlife? where does their consciousness go? is their consciousness itself destined to non-existence?
Death defines life. Without death we would not have life.
The Whole world recognizes the beautiful as the beautiful, yet this is only ugly; the whole world recognizes the good as the good, yet this is only bad.
Thus Something and Nothing produce each other,
The difficult and the easy compliment each other,
The long and the short offset each other,
The high and the low incline towards each other,
Note and sound hamonize with each other,
before and after follow each other.
Therefore the Sage keeps to the deed taht consist in taking no action and practices the teaching that uses no words.
The myriad creatures from it yet it claims no authority;
It gives them life yet claimes no possession;
It benefits them yet exacts no gratitude;
It accomplishes its task yet lays claim to no merit;
It is because it lays claim to no merit
That its merit never deserts it.
Tao Te Ching - II
Essentially we need death to define life. I don't know where death fits in apart from its importance to life.
3. What are dreams? could they be the only time when our mind is completely free of itself, allowing us to do anything?
I don't really know what dreams are. Today my boss was supposed to call me at 12 to let me know if I was supposed to be working at 1 or 5. I had asked to work at 1 because at 6 tonight I wanted to go to an event at the museum. I had a dream that I was talking to my boss and we worked out exactly what I was going to do (which was work at 1). I then was woken from that dream at 12:45 by my phone ringing. While my dream was not really accurate (I'm going to work tomorrow at one and not work today at all) - it was interesting that I dreamt of a conversation and then was woken by the beginning of that very conversation. I would say that dreams are our thoughts without being hemmed in by our conscious mind - they are our irrational unconscious side.