This episode was billed as an homage to "Cold Lazarus", and in some respects, that is a good description. There have been several re-tooled "SG-1" episodes during the course of this series, however, and that is not always a sign of weakness. Even if a concept is overly familiar, it can work again if applied to new characters and handled properly.
While the final showdown with the "dream predator" in this episode centers on Sheppard and McKay, the story itself highlights Dr. Keller. Jewel Staite is doing a capable job in what could be a thankless role, considering the popularity of Dr. Beckett. Dr. Keller is still very much an outsider in this episode, and she seems to be unsure of her ability to handle the challenges of Team Atlantis. That's a nice way of incorporating the challenges faced by the actress into the role itself.
This episode also includes the death of Dr. Heightmeyer. I have to wonder if there was something else to the story behind her exit, because this seems like an unnecessary death, especially after so many other losses to the cast. Heightmeyer was only a recurring character, but she was useful, especially when the writers needed someone for the characters to confide in, as a form of exposition. The death was clearly designed to underscore the threat posed by the alien, but it came across as gratuitous.
Despite the action-packed final act (probably based on yet another network note demanding thrills over character development), most of the episode was character exploration. In fact, I would say that this episode was just as important as "Reunion" in that regard. The previous episode introduced Carter as the new authority for Team Atlantis; this time, she was dealing with the transition more organically. She may have had some answers to provide, but she didn't come across as high-handed with her suggestions. This could be a good sign.
There's also more grist for the Sheppard/Teyla mill. The third season episode "Sunday" hinted at movement on their attraction, and this would seem to confirm it. By "Stargate" standards, this is deep romance, so one might assume that they've been dancing around each other for quite some time. In any case, it would be nice to see something more than brief glimpses of relationships, given how long these characters have been struggling together.
In the end, this episode will not be the best episode of the season, but it managed to take a familiar concept and give it a relatively fresh spin. I'm not particularly pleased with how they chose to escalate the situation, but the writers may have been looking for a way to counter the "retread" vibe. The focus on Dr. Keller helped to make up for it, and the additional character development was more than welcome.