LOL
Bear in mind Dynasty had a spinoff in which Fallon #2 was abducted by aliens... oh, those old days, just when we thought that was the most stupid thing ever...
I am glad that you do not mention the spinoff that shall not be named.

While there are comparisons with Dallas' dream, the
reason for the UFO was actually worse. Pam's dream was a ludicrous resolution to an almost impossible puzzle: how to bring back to life a character who flatlined on screen.
But the UFO happened for no good reason other than a producer going senile and nobody having the guts to stand up to him. In
I Am A VCR Marvin Kitman reports (supposedly) Robert Pollock's account:
"'Apparently Richard Shapiro had had a dream. He was tremendously excited. At the time the novel
Communion was a smash hit. The supernatural was being discussed over dinner-parties everywhere. I couldn't discourage him. I was very worried about our writing ourselves into a corner. How would we get Fallon back? Richard said: 'We'll worry about that next season.' The scene was not received with enormous enthusiasm, as I expected."
Gordon Thomson has given an account (available on youtube as a voice recording I think) of Esther Shapiro calling up late and warning every part of the producing/writing team the night before that when the following morning at the writers' table her husband would present the idea, whoever laughed would be fired. Thomson has never shared which person told him that story, and sometimes he tells it as if he were present, but of course he had nothing to do with the spinoff by that point (or ever other than occasionally guest on it).
In a commentary where the Shapiros discuss the scene (on DVD?) Esther Shapiro states that the UFO broke the limits of the genre and its reality and it was a huge mistake. Richard tried to backpedal during that convo, and stated that it would have been a hallucination of Fallon's--indeed that is how Dynasty treated it in season 8, using it in a nice pivotal conversation between Steven and Fallon to illustrate why Jeff and Fallon were a mismatch and utilizing it to drive a wedge between the married couple. But the original scene left no doubt of an objective POV--the camera showed that UFO flying off against the credits and then being ready for its Cecil Demille close-up. And Esther even shut that idea down, saying "Dynasty doesn't do stories about someone's grip on reality." Which of course is not true because Fallon had this false memory of her brother raping her, but neither here nor there.
Interestingly, the Shapiros have given multiple accounts of why it happened. In an interview during the 87-88 season, they stated a very mercenary reason: they thought the network would be forced to bring them back even for a limited run with the excitement the scene would generate (as if). Then when talking to Kitman (I kinda assumed Pollock was fed the story by the Shapiros) they claimed it was the zeitgeist of
Communion and Richard's dream--not unlike Esther Shapiro claiming that her watching "I Claudius" inspired Dynasty, not the Ewing shenanigans. And then came the "psychological reality" BS. But the reality is that the Shapiros thought of both shows as their own personal choo-choos by that point. Unlike peach Dynasty producers, who saw the show that way from the very first day.