Are dreams ever consolidated as memories unless recalled by the upper level of the mind sufficiently upon awakening with the desire to remember them? That would allow them to be catalogued as dreams, and not real events.

Your question nicely describes the conditions under which reconsolidation will happen for dream material. It is only when the conscious mind becomes privy to what a dream is about that it can become stored and subject to recall like the memory of an actual physical experience. This indeed is to compartmentalize things so that everything that is dreamed is not remembered and felt to have actually occurred in reality. So it is a protective mechanism to prevent the accumulated clutter of countless episodes of fantasy material used by the deep subconscious to work through its conflicts in an effort to reconcile the many difficulties and issues a person may struggle with. Becoming bogged down with endless memories of fantasy situations would be, in effect, a misdirection if taken to have been real occurrences—that would give them much greater importance. The fact they are not stored through reconsolidation as permanent memory, shields the self from their consequences. Dreams are accordingly ephemeral. They are experienced as an impression and then are gone, so it is a kind of a working through of experiencing information and making decisions about how to deal with it, none of which, in a sense, counts because it is a kind of planning, a kind of rehearsal for life, and not actually being lived through in the moment. But this is a very important way for the deep subconscious to sort through competing needs and competing agendas, and often discordant beliefs that somehow must be reconciled to choose courses of action. So this is a kind of training ground allowing a provisional testing of various scenarios as well as a kind of safety valve to allow some things to unfold in the imagination to work through frustrations, have an outlet for aggressive feelings and other harmful emotions, and this will help to provide an emotional release as well as a kind of reconciliation with the self, to diffuse many circumstances that come up and help to sort through what truly is urgent and needs ongoing attention, and what can be dispensed with after a certain amount of processing to assess its overall significance to the person and their future. So this protects all of the fantasy life and provisional solutions being tried out in a kind of theater setting from being stored and remembered as actual life experience.