In a previous thread someone mentioned the same thing about it being a different universe and "how can they rebuild that fast in 5 years." Here's my response:
In real life we're used to bureaucrats and red tape hindering construction projects not to mention labor hours and pay scales. We're lucky to get a road redone in 5 years. In FFXIV bureaucrats and red tape do not exist. The 3 city-states are working together with their Grand Companies and pulling resources, minerals and ore from Ul'dah, lumber from Gridania, and Limsa has the ships to transport them quickly. On top of this we have a huge resource in Cid and his Garlond Ironworks crew. They were around long enough in the Garlean Empire to have picked up and recreated Garlean tech. Remember the Garleans can practically build a forward base in one night with their technology and airships. The city-states may not have the resources that the Garleans have, having conquered various lands and practiced their technology arts for years. But Cid and the Garlond Ironworks are doing their best, 5 years is a long time in Eorzea. After all the majority of Bahamut and Dalamud's destruction missed the city-states and instead hit the lands outside their walls.
As for the Echo..the power of the Echo was given to us by Hydaelyn/The Mother Crystal/The Lodestone. The beginning main scenario quests (Ul'dah, Limsa Lominsa, Gridania) were told through the power of the Echo, which at the time we didn't know we had until Minfilia (who is actually Ascilia from the Ul'dah story line) explains it to us at the Waking Sands and the Path of the Twelve scenario.
1.0 was not a dream and our 1.0 characters will see what happened while we were in 'slumber' through the use of the Echo. I think it's too much of a stretch and a very poor twist for 1.0 to have been a dream and 2.0 to be the "real" story. It water downs our major accomplishments such as killing Nael van Darnus and our interactions with Louisoix as we defeat the Primals. Also we are clearly "teleported" and arrive into the new Eorzea in ARR..where the new chapter in our story will begin.