[quote=AABowser]
This was not a dream Tony had wanted to wake up in the middle of.
[/quote]

Tony is subconsciously afraid of history repeating. That Mario/Margarito will always be the main hero, and Luigi/Tony will always be second best. For that reason, he had a nightmare about what would happen if the opposite was to happen, and Margarito keeps wearing that smile until the end of time. Luigi [i]might[/i] be having some sort of psychological connection to Tony, causing him to be reminded of a similiar nightmare that used to haunt him.