First off, let me say again that I didn't partake at all in the first place. It came from a place of fear, but I decided against it. I may have called it a ceremony, but it was far less formal than that sounds (it's just the most appropriate word I could find for the setting).
As someone who has spent some time pursuing etheogens as a route to 'enlightenment' or 'awakening', my experience has been that they lead further away from reality.
They can be very seductive, and promise much, but for me at least they lead further into illusion (a very vivid and inviting one, but an illusion none the less). Partaking in sacred sacraments, whatever they may be, brings about a temporary change in our perception of reality, a different dreaming, but a still a dreaming. It is just a 'state', something temporary that evaporates in the light of day.
Not to start a debate or anything, but I've done quite a few entheogens. For all of them except 5-MeO, I'll agree with everything you say here. 5-MeO though is different as it's the only true entheogen I've met. It's the very opposite of dreaming or altering reality. It's the obliteration of perception/the dream itself - ego, mind, everything dissolves into Nothingness - the Void. Now, I haven't "gone all the way" yet, because while in a nightmare your natural reaction is to wake up, in this nightmare (it's really scary to dissolve if you've never done it before) the natural reaction is to want to go deeper to sleep.
I don't want to belabor the point (because while the experience is one outside of time, it's still temporary).
Fear exists only where there is a 'self' to experience fear, and some other 'thing' to be afraid of. Without both the 'self' and that 'thing' fear cannot exist. What we do here is look at whether there is actually a separate entity called 'self' in the first place. We question the fundamental BELIEF on which that fear exists.
For example, if you are asleep and having a nightmare that you are being chased by something which evokes terror, you might wake up in a cold sweat. Look around you, where has that terror gone? It hasn't gone anywhere, because it never existed in the first place. When you are 'in' the dream, and believing it, it all seems so tangible, but when you awake you see the dream for what it really is. Likewise with the illusion of self, going further into the dream won't help you wake up.
I hope that didn't sound too preachy, as I do respect your choice to investigate the nature of consciousness through altering perception. Unfortunately you cannot continue here if that is your choice. You are of course free to come back any time, but not while so invested in the dream.
The only part invested in the dream is that fear. The fear is unwanted. I don't see the goal of waking up and looking at that fear as incompatible. In fact, as your next question deals directly with it, I'd say this experience may have been flirting with "the rules," but was certainly helpful in showing me that fear very directly now. I can't see it as but an enhancement.
What is fear in direct experience?
The guardian that protects against the ending of the story of self.