I went on so long writing this comment in response to Craig's comment on my "Inception" post, I thought it might be better to just post the whole thing up here.
First, do go to the comments section and read Craig's comments -- the details he noticed are awesome and seem to put the case beyond a doubt that Leo was trapped in a dream (and also show I was only paying some kind of half-attention). I particularly liked this observation: "There are no establishing shots or lead ins to scenes. Everything starts in the middle, causing you to maybe ask "How did I get here?", not unlike the test they mention in the movie." That is so true, and another great and subtle thing Nolan did to give the whole movie that dream-like quality that's only really apparent after you leave the theater.
Craig also asked: "Why would Dom's subconscious produce so much exposition? Have you ever explained how something works to yourself in a dream?"
I actually feel like I have woken from dreams where I've had what seemed like elaborate concepts explained to me, and during the dream, all that exposition seems so cogent and well-written but it's logic fades shortly after waking, if any stays at all. So the exposition aspect felt correct to me.
Which made me think of an alternate interpretation.
After the movie, the wife and I followed the 'it was all a dream' concept to one possible conclusion: that the concept of 'shared dreaming' that was so integral to the plot was itself an elaborate figment of the dream. We dismissed it because if that were true, all the film's action would be just so much dreamy irrelevance. If nothing of the film can be accepted at face value, then what was the point exactly?
But thinking about it now, it does seem plausible and even narratively legitimate that the concept of shared dreaming was part of a dream. The film, all a dream, could have been the story of a smart guy trapped in a coma or life-support or whatnot, experiencing his subconscious's last best attempt to wake him from his dream and into real life, ending with Leo's failure to rise to that challenge. Because the whole idea of shared dreaming -- with that nifty, never-explained old reel-to-reel-style equipment they were able to just dream up at every dream-level -- did seem sketched in, just present enough to plausibly get the plot and action flowing. Again, to me, very dream-like.
So if it is all a dream, even the shared-dreaming conceit, a lot of the film still works. If Leo were in a coma, the people he cares about most would make appearances, and when they did, strong emotions would accompany them, as they do in the movie. Extreme grief, guilt, and terror in the scenes with his wife, Marion Cotillard, warm regard and affection in the scene with Michael Caine -- maybe the people whose accompanying emotion is most intense are the people closest to Leo in real life. If this is so, one wonders then who Lucas Haas's character might have been to him, as his departure from the movie seemed to particularly wound Leo.
Leo's subconscious, knowing he is not awake, could very plausibly "build" this elaborate dream-plot so that Dream-Leo can confront questions of 'Am I awake or am I dreaming?' which may help him understand his plight so he might then wake from it. Which is why, perhaps, when it is safe within the dream's structure, the dream sets up multiple circumstances where Leo can "practice" waking up, from all those dreams within dreams, to give him the courage to do it the final, most important time. Maybe the end of the climactic sequence, where all of Leo's teammates are waking from one dream after another, is his subconscious's most direct assault on Leo's conscious mind to get Leo himself to wake.
Just a possibility. Some of this stuff I feel like I could argue with myself about ("...but if that's so then the whole Saito sub-plot which was so awesome isn't as awesome. And if that's so, the whole move becomes purely a technical exercise in precision without any real identifiable heart.", etc.) but I think the movie is left open to interpretations like that. I almost feel that the Nolan brothers might even have some page-long "secret script" that explains What-was-really-going-on, but then that may be overestimating Nolan, which I guess is possible.
But it's also just fun to talk about this movie.