Although there are certain common side effects to all drugs, each person can react differently. Propranolol for example does have this type of effect, producing very vivid dreams, a common side effect and is listed. If when taking Tylenol you have such dreams then this is your side effect, whether listed or not.
Why we have dreams at all is open to debate, it happens is about as far as you can say for sure. As we are a very complicated arrangement chemical processes at a basic level it should not surprise us that adding more chemicals to the mix will have some effect, it is just the magnitude that can vary dramatically in some cases.
It is not an allergy, as that is a hypersensitive reaction of the person's immune system.