When watching this episode, I liked the first reference to a previous episode, the second was ok, the third was pushing it a little, but when a fourth and fifth previous episode was mentioned, I feel like reaching into the screen, grabbing said character and telling them not to draw so much attention to the fact that this is not an original episode.
It's not the same thing as a serialized show like the new Battlestar Galactica, which builds upon it's previous episodes. Atlantis is just recycling plotlines from previous Stargate episodes and even other much older tv series.
The plot basically goes something like this: strange crystal containing strange entity invades the dreams of Atlantis personnel and eventually kills them until one or two main characters face their worst nighmares and manage to defeat it. End of episode.
It's about 10 years too late. Let's have a radical new direction for the show please!