They would both win. Hobgoblins and Gremlins would join forces! Humanity doomed. Lemme check my calculations. Join Forces - All Die Even had it underlined.
Who’s to know beasts respond to dreams identically to humans. Gremlins are also notoriously disruptive and on their own wavelength. I can’t envision uninterrupted dreaming persisting as Gremlins bother other Gremlins on a regular basis. Hobgoblins require a lack of distraction for their powers to have maximum effectiveness and a singular focus of one mind at a time. So many Gremlins exist and can mass produce on a whim Hobgoblins are quaint by comparison.