Nightmare on Condemmed Street - S1.E40

After a series of bad nightmares, Peri decides to use one of the Doctor's dream machines to enter his subconcious and confront his nightmare monster. However, once inside, he discovers that the toaster-headed monster isn't such a bad guy after all. Together with Entree and Patricia, they become "Dream Gladiators", protecting the dreams of all the mutants on the island.