What an interesting question, and a very enlightening answer from Moremojo regarding dreams in films.
I think they tried to convey the feeling that Ennis was 'living with Jack' in his own mind and in little fantasy world he had built for himself (which is close enough to dreams) by showing him talking to the shirts and sticking number 17 (believed by some, including myself, to be a code for Brokeback Mountain, 17 letters) on 'their' letter box and a photo of BBM in the closet. Effectively he has set up home with Jack in this dreary trailer that he is turning into Brokeback Mountain. Jack said at their last meeting 'all we have now is BBM' nd indeed all he has now is the shirts, a postcard and memories of the time 'when they owned the world and nothing seemed wrong'.
In the story, Ennis is perhaps more aware of his emotions and his inner conflicts and more open about them (eg motel scene) and this inner conflict carries on till after Jack's death with the 'comic obscenity' of the dreams. But in the prologue he is 'suffused with pleasure', he has accepted Jack's love at last. Ang Lee was forced to keep the film not too long, and perhaps he tried to amalgamate the end of the story AND the prologue in the last scene: Jack is still hidden in the closet, the trailer has a code name, not an explicit 'Welcome to Brokeback Mountain' plaque, but Ennis mentions the word 'love' for the first time. And there is the presence of the daughter. Film Ennis seems to me more conflicted than story Ennis and less aware for his own feelings until Jack's death, but then he seems to accept that what they had was love more quickly and more fully than in the story, as soon as he discovers the shirts. Even if he keeps it a secret.
I don't know if you see it the same way, but to me, from the moment Ennis receives the deceased card, the film seems more like the expression of Ennis's emotions, his inner landscape, rather that filming of objective reality. To me, there is something a bit unreal about the phone call although I cannot pinpoint it - Lureen's singing voice? her artificial looks and all these violent colors (red, black, straw blonde)?. And at Jack's parents, the blueish-white light flooding the rooms downstairs and upstairs is like in a dream. Also everything in the house seems to be white (death?) or blue (Jack), like bathed with Jack's ghostly presence: white walls and staircase, parents' washed out blue clothes, old Twist's blue eyes shining like glass eyes, really spooky.
So perhaps this is how they tried to convey the dream element in the film?