Well this episode is definitely cheesy, but it was also actually mostly relevant. The subplot of Clark and Chloe and retarded/drunk not-Santa Claus was really stupid and pointless though. The Lex plot was too good to let the crap side-plot ruin the episode, which is why it got such a high score from me.
Lex's little getting shot incident in the alley proved to be the turning point of his life, which made the episode worthy. Going into his dream, he was confused, then happy, then realized he felt that he belonged in this alternate life and loved every minute of it. I personally loved the decorations and the Christmas-y atmosphere, it set a pleasant mood, while still bringing about sadness when reflecting on the current state of Lex's life compared to this utopia-like dream. This harsh comparison came into play when Lana died and Lex realized that if he is to ever be happy, the love of his life will have to die. He's not willing to make that sacrifice, so he therefore decides to ruin Jonathon Kent's chances at becoming senator and confirm his life of villany. So, although it was hokey, Lex's dream sequence provided back-up for Lex's decision and made him seem quite rational for doing what he did. Excellent.
But then we move on to the stupid Clark/Chloe/Retard Santa side plot. The idea was alright, and it was nice that Clark saved not-Santa from falling off that building, but when he came to visit Chloe and made those gifts disappear, that was just going too far. THAT was the whole point of that sub-plot??? To make us believe there's a Smallville-world Santa? Lame. "Buh-duh, maybe there really IS a Santa!" says Chloe. Gah how horrible. That plot should have stopped when Clark caught Santa at the bottom of that building.
Side note, I wonder why no one classified this episode as Dream Sequence, as that's what half the episode was and what the main plot revolved around.