I have read the great suggestions written so far - exercise, travel, etc. Great, I hope something hits the mark.
I have two things to suggest. I hope they help. If I'm being blunt, I apologise.
1. Simplify your thinking.
If you have a habit of overly abstract thought, you can make problems more complicated than they need to be. You could say it's a bit like spiritual java programming.
For instance, aims such as "become a virtuoso musician" don't mean anything. They lack concreteness. "become ascetic monk on mountain top". Also intangible.
You say you recognise them as daydreaming. But your whole way of thinking is daydreaming - "What I think ..", "What I fear ...", "doom", "failure". All abstract daydreaming. Do something about it. Stop daydreaming.
Make a promise to yourself: you will reject thoughts that don't have a tangible aspect you can act on immediately. They are tiring you. Let your brain rest awhile. And if you have to think about problems, think about other peoples' problems not your own.
That means real, tangible people. It could be anyone. This is not a moral injunction. It's practical - if you look to see how you can help other people it requires empathy and if you develop empathy you start to see other patterns of thought. It may help you see different ways of thinking and get you out of your rut.
Only think a few days in advance. Reject all thoughts of the future for a while.
2. Tone down the ambition.
You imagine a virtuouso musician or some epic bike journey, some massive startup. Therefore anything you actually you do seems crap in comparison - attempts noodling on the piano or going for a small bike ride around the neighbourhood seem silly. Trivial. Pointless. Why bother? Stop comparing yourself and your life to your daydreams (see point 1).
I write this because this is what helped me. Please ignore it if it doesn't feel right.
Please do be blunt! I'm more than willing to have my feelings hurt to learn something that may be helpful here.
That said, I did give a very long and audible sigh when reading your post. It feels like a cop out, but perhaps one day I'll have to accept my own mediocrity.
I hazard a guess that it's failing to live up to what you imagine. And then you feel like a failure. Mediocre. And when you give up, you feel like it's a cop-out.
It seems that you interpreted what I wrote through a filter of that sort of thinking. When I suggested that you give up on your current pattern of thinking you tell me it feels like a cop-out. It's the same pattern, as far as I can tell.
What you're dreaming up are intangible, speculative things with no basis in reality. That's fine if you feel good about it. But I don't think you do. You seem to be rejecting it on various levels.
What I am saying is link your thinking to tangibles. Test your ideation against reality. Stop pondering monks on misty mountain tops for a while. If you could imagine those monks with any clarity, you would already have had the experience. Instead - go and talk to monks. Go and visit mountain tops. Fill your mind with new experience.
Don't ponder this any further. Just take the first steps to seeking out new experiences.
I think you did not get what ngom said here correctly. I got the feeling that he suggests travelling around the country, walking in nature, running a sustainable startup is not mediocre at all; they are all rare and outstanding activities not many people really do.
To me it seems like you have a Mastermind personality (http://en.wikipedia.org/wiki/INTJ), one which is pretty hard to deal with. Execute your plans, not your imagination.
I have two things to suggest. I hope they help. If I'm being blunt, I apologise.
1. Simplify your thinking.
If you have a habit of overly abstract thought, you can make problems more complicated than they need to be. You could say it's a bit like spiritual java programming.
For instance, aims such as "become a virtuoso musician" don't mean anything. They lack concreteness. "become ascetic monk on mountain top". Also intangible.
You say you recognise them as daydreaming. But your whole way of thinking is daydreaming - "What I think ..", "What I fear ...", "doom", "failure". All abstract daydreaming. Do something about it. Stop daydreaming.
Make a promise to yourself: you will reject thoughts that don't have a tangible aspect you can act on immediately. They are tiring you. Let your brain rest awhile. And if you have to think about problems, think about other peoples' problems not your own.
That means real, tangible people. It could be anyone. This is not a moral injunction. It's practical - if you look to see how you can help other people it requires empathy and if you develop empathy you start to see other patterns of thought. It may help you see different ways of thinking and get you out of your rut.
Only think a few days in advance. Reject all thoughts of the future for a while.
2. Tone down the ambition.
You imagine a virtuouso musician or some epic bike journey, some massive startup. Therefore anything you actually you do seems crap in comparison - attempts noodling on the piano or going for a small bike ride around the neighbourhood seem silly. Trivial. Pointless. Why bother? Stop comparing yourself and your life to your daydreams (see point 1).
I write this because this is what helped me. Please ignore it if it doesn't feel right.
Best of luck, I wish you all the best.