I love this alternate reality episode!
It is basically a farce, it's there to show some points about characters and to have a little fun with the season one events. I personally think it was brilliant.
Of course Lucas was a terrible "bad" guy, but I think Chad acted it like that on purpose - and what I saw was a tongue in cheek method acting there. He was so bad he was worse than Nathan and that's pretty bad. He was over-reaching for "effect". It's ultimately funny.
The dynamics were so funny in this episode. We had Lucas and Dan's relationship which mirrored Nathan's and Dan's. Dan was still tough on the son he had living with him. Dan was still detached with his wife, which happened to be Karen. Karen was a successful business-woman like Deb was in S1 with a dozen cafe's. Meanwhile Deb was disowned by her parents and got no money from them when she became a single mother so she opened 'Deb's Den' mirroring Karen's struggle.
So Nathan took Lucas' spot as the good guy who is good friends with Haley. Some of the Nate/Haley dynamic stayed the same, or similar, but in Nathan's dream version Haley was tone deaf. LOL.
Dan and Keith's relationship was backwards. Keith has the upper hand by owning a dealership and Dan is the peon. Keith gets the opportunity to call Dan "Boozy" like Dan has called him all those years.
While Nathan and Haley still seem to be able to get together in this "alternate" world, Karen and Keith still manage to be together. There is even a cool reference to where Karen sometimes thinks Lucas' is Keiths. It's not clear, really, but I'm guessing Lucas and Keith still have a pretty good relationship in the AU world here.
Haley, Peyton, and Brooke are pretty much the same people.
It's nice how it was supposed to be opposite - but at the end Nathans subconscious started to change events between him and Haley.
I just thought the whole thing was brilliant.