Quark is annoyed because Odo is hanging around his bar hassling him when there's very little in the way of customers. Also, Jake is apparently using the holosuites to play baseball in. And Bashir is trying to get laid with Dax, but she gives him the "we're great friends" speech. And Sisko and Kira have detected energy anomalies. And O'Brien is reading Rumpelstiltskin to his daughter when the man himself turns up. O'Brien calls security, who fail to be at all effective in grabbing the dwarf. Meanwhile, one of Jake's famous baseballers has followed him home from the holosuite, and Bashir finds Dax suddenly coming on to him. Unfortunately for him, they're called to ops to meet Rumpelstiltskin and the baseballer, and then the real Dax turns up.
They discuss what to do about the new arrivals, and Odo reports it's snowing on the promenade, prompting some exposition from Sisko about how images from their imagines appear to be manifesting in reality. Alarmed, Odo stalks into Quark's bar and announces everyone has to stop using their imaginations. Quark himself turns up with a couple of scantily-clad females. Shouldn't they be naked, as is the Ferengi tradition? Odo points out that whatever's happening is causing all of Quark's customers to win, and suddenly he doesn't feel quite so happy.
They send a probe into the subspace anomaly causing the problems, while Rumpelstiltskin hassles O'Brien some more. They establish the fold/tear/anomaly is growing bigger.
Rumpelstiltskin, the baseball player and Fake-Dax meet to discuss their progress so far. Evidently they are Up To Something.
The command team discuss using a pulse wave torpedo to seal the rift, even though last time it was tried on a rift, it all went HORRIBLY WRONG and nuked a whole star system. Kira hallucinates a fiery disaster. There are hijinks on the promenade, and Quark complains about his missing babes before claiming that Odo has no imagination. Odo pops back to his office and conjures up Quark-in-a-cell for his amusement. Jake, too, seems to have gotten the hang of the whole conjuring up figments thing.
Dax reports that the rift's bigger and now visible to the naked eye. Blue swirly thing alert! They fires torpedoes into it, starting the collapse, but suddenly it ALL STARTS GOING WRONG! Fake-Dax is injured in the resulting tremors, and Bashir tends to her. Rumpelstiltskin offers to seal the rift in exchange for O'Brien's firstborn. Sisko suddenly realises that the rift isn't real, and just another product of their imaginations. Once they realise this, the rift and all the figments disappear. Sisko goes back to his quarters and chats with the baseball player, who admits they're life forms who are visiting and studying the humans.
Damn aliens, can't just come and say hello and chat like normal people. Sheesh.