The woman only known as Beautiful Dreamer is a member of the underground mutant race named the Morlocks, outcasts from society that lived in tunnels beneath New York City. She was among the Morlocks to survive the mutant massacre orchestrated by the Marauders.
Her first appearance was as one of a small group of Morlocks that encounter the Power Pack when they found themselves in the NYC sewer system. They attempted to capture the Power children so they could brainwash them and present them to the Morlock Annalee who had recently lost her children, and as an empath, was broadcasting great feelings of sadness to the rest of the Morlocks. The power children were rescued by Shadowcat and Nightcrawler of the X-Men.
During another confrontation with the Power Pack where the Morlocks once again attempted to capture the Power children, Beautiful Dreamer used her power to restore their original memories which allowed them to return back to their normal lives.
The original X-Factor team rescued her from the massacre, and since then Beautiful Dreamer has returned to the tunnels and has kept a low profile, but she followed the terrorist Morlock Leader Masque for a while and committed criminal acts by manipulating others with her mental powers at his behest.
However Beautiful Dreamer's primary motivation for doing so as with most of her Morlocks is presumed to be her desire for company and community, Beautiful Dreamer may use her powers against others when it is demanded by her leader or peers, but her low level genetic mutation and her passive personality makes her a minor threat.
Beautiful Dreamer was one of the few mutants to retain their powers after the events of M-Day and took up residence for a time on the Xavier Institute grounds.
After the remaining powered mutants left the Xavier Institute, Beautiful Dreamer dropped off the map. It is most likely that she returned to the Morlock tunnels with the rest of her kinsmen. However, she was somehow kidnapped by the Sapien League and used to kill a crowd of unsuspecting Friends of Humanity supporters after the Leper Queen injected her with a mutated strand of the Legacy Virus that magnified her powers to new levels. Beautiful Dreamer's powers forced the minds of the entire crowd to forget how to tell their hearts to beat, and after her powers burned themselves out, the entire crowd was killed, along with Beautiful Dreamer herself.
Beautiful Dreamer had low level telepathic abilities which she used along with her 'dream smoke' to alter the memories of others.