I've found that the "weird dream" side effect is very dose responsive. Most melatonin supplements I see include doses much higher than are required, in the 3-5 mg range. Very small doses (as the OP mentioned, in the 200-400 microgram range) should be plenty as a sleep aid and (for me anyway) avoid the enhanced dreams.

I will sometimes take 5 mg when I wake up in the middle of the night in an attempt to induce lucid dreaming, although since I've fallen off of my dream journal my LD abilities are diminished (even with the melatonin).