one thing is absolutely clear: that Leone intended for the movie to at least have a dream as a possible interpretation. Not that he necessarily wanted the story to be a definite dream, but he absolutely intended that the movie should have a dream as a possible interpretation.
Check out this vid at 00:46 http://www.youtube.com/watch?v=LOxhq227RhI
(I've shared this clip before on this threda and elsewhere, but the previous link was taken down; this is a new link)
The speaker (I believe it's one of the screenwriters) says that as they were leaving the first showing of the film in a theater in Rome (I'm not sure if it was technically the "premiere," but whatever...) someone asked Leone about the meaning of the final smile, and Leone said that maybe, just maybe, it was all an opium dream.
So, whether you prefer thinking of the film as a dream or not, I think it's clear that Leone intended the movie to be a dream at least as a possible interpretation.
and btw, the fact that the script makes no specific mention of a dream is not an argument against the dream theory. A script doesn't necessarily discuss the meaning behind a film or the interpretation of a film, (especially if something is intended as a possibility; if it's intended as a m"maybe," as a double meaning, rather than as THE meaning.)
if the final smile in OUATIA is supposed to indicate a dream, it wouldn't be necessary for the script to say "this is supposed to indicate a dream."
Here is how the OUATIA script ends:SCENE 162 OPIUM DEN (1933) Interior. Sunset.
The old CHINESE LADY greets him. In a moment he's stretched out on a mattress and dragging deep on a long-stemmed pipe.
He holds the smoke in his lungs for a long time before letting it spiral out and up towards the ceiling. The smoke is harsh and kind and cleansing. It wipes out memories, strife, mistakes... and Time.
I don't think that's inconsistent with a dream interpretation. I've hardly ever read any non-Leone scripts, so maybe those who have can clarify this, but my assumption is that a script doesn't discuss interpretations. If the movie really intends the dream at least as a possibility, would the script have to add, "This has all been a dream"?