This does not mean it is not useful - it is extremely useful, and should be applied wherever it can be useful.
However it still addresses a subset of reality, more than we can know by using pure sense data/empiricism, but less than we can know of reality it total. Psychotic, by definition, error in their perception of reality. However, one can be insane - and still use logic perfectly. The two are not necessarily connected.
I'm not commenting on you view of dreams, only the fallacy that all that can be known of reality, and all that exists in reality, can be known using reason/logic.
Logic, law, and word are nearly the same in the root. Logos, legis. All of these apparently are from the Indo-European lex-, to gather. We're gathering. There is no limit except our ability to learn and gather; mende- learn, mathematikos, learning. It's what we do, we are men, women, learners, gatherers.
It is true, reason does not make one omniscient. But, if we are to know anything about reality (which I define as all that is, the way it is), reason is the method we must use.
...more than we can know by using pure sense data/empiricism, but less than we can know of reality it total.
This is a little confusing to me, but what I think you mean is that we can be conscious of a great deal (for example, I can see at night a vast universe) but by reason can only reach a partial understanding of all that we are conscious of. If this is what you mean, I think it is a mistake to use the word "know" for that which we are only conscious of. I understand it is a common use of the word, but in an epistemological sense, we only know what we have conceptually non-contradictorily identified and integrated with everything else we know.
I think this answers the rest of your comment as well. (By the way, I do not agree that an insane person can use logic perfectly. They might use logic correctly in some specific area of cognition. If they were completely logical about everything, of cousrse, they would make no mistakes, and would be perfectly sane.
Thanks for the comments.
Hank