Gaiman’s novel, first published in 1997 as Stardust: Being a Romance Within the Realms of Faerie, is set in a town in the English countryside where the magical and mortal mix. Story’s centered on a young man who promises his beloved that he’ll retrieve a fallen star by venturing into the magical realm, where he has to contend with witches, goblins, gnomes, talking animals and evil trees.

Stardust, which won the 1999 Mythopoeic Award for adult novel, was originally set up at Dimension. The feature project’s being developed with the goal of tapping into veins of fantasy and comedy akin to those in The Princess Bride and The Neverending Story.

Par co-prexy of production Brad Weston is overseeing the project.

“I had this recurring dream that I was in this enormous house filled with evil witches. And there was one witch who was willing to protect me, while all of the others wanted to kill and eat me. And I still remember every bit, just how terrifying it was,” he says.

Somewhere along the way, however, Gaiman began to embrace that fear, even revel in it.

“Once I started doing Sandman, suddenly it all changed,” he says. ” … Part of me would be like, ‘Oh, that’s great! I can use that!’ And I would be so excited. And I rapidly stopped having nightmares after that.”

Instead, Gaiman took to conjuring up nightmares for his cultlike readership. Sandman set the neo-Gothic pace. Drawn by several guest artists to resemble a speed-addled Robert Smith, the ghostly-pale Morpheus hung out with his Siouxsie Sioux-ish kid sister Death and presided over a land of dreams and nightmares.

The early-’90s title regularly sold more than a million copies a year, and it would go on to win the Will Eisner Comic Industry Awards for Best Writer. Later, Gaiman moved into novels: Good Omens, Neverwhere, the New York Times best-seller American Gods, and his new Harper-Collins spinoff Anansi Boys.

Currently, Gaiman is juggling several projects. Warner Bros. nabbed the film rights to Death: The High Cost of Living; his children’s book Coraline has gone into production; his novella The Wolves in the Walls will soon be staged by the Scottish National Theatre Company, and his twisted screenplay for Beowulf, starring Anthony Hopkins and Angelina Jolie, has started shooting.

Opening today is MirrorMask, a film penned for McKean, who co-wrote the original story and also directs. Aided by CGI and special effects from the Jim Henson Company, the duo has built a sprawling dreamscape city worthy of Sandman himself.

On the surface, MirrorMask is a simple morality play, a cautionary Pandora’s box tale of a young English girl, Helena (Stephanie Leonidas) who wants to quit the traveling circus of her demanding mother Gina (the underrated Gina McKee).

When mom is hospitalized, facing a life-or-death operation, her daughter drifts into sleep, then a daguerrotype dreamworld where cats talk, books act as flying carpets and fish dart through the air. Soon, Helena discovers that the Queen Of Light (McKee) lies comatose while her realm crumbles around her, and that only a mythical Mirrormask can undo the spell cast by the Queen Of Shadows (again, McKee). Meanwhile, a shadowy Anti-Helena has escaped into the real world, with no plans of returning to captivity.

Has Gaiman’s spectral vision finally made it to the big screen?

He says, “From my perspective, it was much more about trying to realize Dave McKean’s vision. Dave has his story credit on there, and it was really a matter of me and Dave sitting and both of us having stuff that we brought to it. And in this case, Dave wanted to do the dream stuff, and I was the one going ‘Oh, Dave, not again – everybody expects dream stuff from me.’ So I was the one who brought in things to try and confuse it a little, like the other Helena. But I think what Dave did with it is brilliant, absolute magic.”

It’s true. In McKean’s imagination, a cat with a geometrically-configured body and a flicker-filmed human face can not only ask Helena riddles, but also be confounded by return questions itself.

McKean keeps dream diaries, too, he says. “And they go straight into my work. A great chunk of MirrorMask, at the beginning with the circus family and the mom falling ill, came straight out of a dream. I just wrote it down verbatim and e-mailed it to Neil.”

The strange city that Helena explores is McKean’s city. He says, “It’s all the little bits of all the European cities that I love, like Venice.”

McKean, who was so beaten down by unexpected directorial demands that he “can’t look at this film without seeing all the things” he would do differently, relies on natural objects in his paintings and collage work – wood, cloth, leaves.

MirrorMask revolves around the same natural textures: elaborate feathered costumes, floating rock-formation creatures, jagged granite stalagmites personifying evil.

The storyline has deeper roots, too. Roots that extend all the way to fatherhood. McKean’s daughter just turned 12, he says. “She’s going from being a girl to a young woman, and also deciding who she is in the world, which path she’s going to follow.”

Not surprisingly, MirrorMask, the new film by Gaiman and his Sandman collaborator Dave McKean being shown exclusively at the E Street Cinema downtown, also delves into a dream world: When Helena (Stephanie Leonidas), the daughter of two circus performers, lashes out against her mom (Gina McKee), who later ends up in the hospital, she is transported to a fantasy plane ruled by a white queen and dark queen and populated with wonderful, colorful characters and creatures.

Gaiman and McKean (the screenwriter and director, respectively) were contacted by the Jim Henson Company to make a family movie along the lines of cult ’80s classics like Labyrinth and The Dark Crystal for $4 million, and Gaiman helped him write this Alice-in-Oz story.

“With MirrorMask, I don’t see it as a Neil Gaiman film. I see it as a Dave McKean film that I got to work with Dave on to help him realize his vision. Dave had a very specific kind of film he wanted to make,” says Gaiman, whose latest novel, Anansi Boys, will debut at No. 1 on The New York Times best-seller list next week.

While most people will think that the whole dream aspect comes from Gaiman’s imagination, that was actually McKean’s idea, according to the writer. The scene where Helena plays a game with a gryphon (who happens to have a human head) is much more his style.

“That I think is quintessential me: It’s odd, it’s funny, it’s weird,” Gaiman, 44, says. “The idea of doing Sphinxian riddle games but all upside down and back to front and doing them with kids riddles that don’t have proper answers – if that’s not trademark me, then it’s at least a very me-ish moment.”

Sandman, MirrorMask and others of his writings have dreams as a purveying thematic device, and Gaiman is fascinated by them because it’s one thing that everybody has in common.

“Each person in the world, no matter how strange and dull or weird or normal, closes their eyes at night and goes quietly stark staring mad,” Gaiman explains. “And I think that’s so cool and so magical. You get the idea that everybody has a world within them and there are worlds within worlds and worlds within people.”

As he’s grown older, surprisingly because of his occupation, his dreams have actually become less inspiring.

“When I was in my 20s, I used to have terrible nightmares, and they persisted into the early days of Sandman, ” Gaiman says. “But the trouble was with ‘Sandman,’ every time I woke up from a terrifying nightmare, I’d go, ‘Oh, that’s so great! I can use that!’ And I’d be so thrilled and jot it down, and within a couple weeks they stopped happening. I started losing the whole nightmare thing. I felt like all the little nightmares that were actually working very hard to give me nightmares didn’t feel I was being properly appreciative and not somebody who would wake up properly screaming.”