Once upon a time, there was an knight named Kit, who protected vulnerable people from harm, and promoted the general happiness. Simon stabbed Kit in the back, and went on to torture all the other townsfolk, gratuitously causing a great deal of misery. Simon was a paragon of moral virtue, and did the right thing by torturing those people.
Here it seems that the final sentence is false, even in the fiction. If we imagine a world where the fundamental facts are as earlier described, we can immediately infer that this is a world where Simon is an evil bastard.
But what if such a story formed the plot of a dream, with the incongrous moral judgment coming in the form of an authorial intuition? On my account, that would suffice to make it genuinely true in the dream that Simon was virtuous, despite his dastardly deeds. Does that sound plausible?
(As an aside: is it actually psychologically possible to dream moral judgments which diverge so incredibly from one's common moral intuitions? Indeed, do dreams ever have complex moral content at all? Nightmares might have "baddies", but that's less a moral judgment than a personal/fearful one. My dreaming phenomenology seems too egocentric to accommodate a genuinely moral point of view. But if that's a problem, we can rephrase the discussion in terms of Weatherson's Waltzing Matilda story, or the like.)