Feels like it came late into development. Why is Klonoa the same as the wind race unless the races are shared across dreams (which the concept art for Lolo hints at being a possibility:
>>12034970)
Other than that, it really makes Huepow into a little monster. Brainwashed Klonoa after dragging him into his dream world, gave him a fake family and inserted himself into his memories, then uses him and sends him on his way last minute.
But of course, it's not that deep. The sequel also makes it seem like Klonoa doesn't actually have his own dream world and is more of a wanderer, but it would have been neat to see Klonoa's own world after the ending of 1.