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In keeping with the tradition of the first film, yes it was likely a dream.
The only way this would be possible is if he was wearing kevlar underneath his slicker. But seeing as how he wasn't expecting anyone to show up with a gun on the island it's unlikely he prepared that much. Also after Julie shoots him he falls into an open grave and he proceeds to sink into the mud. Not to mention he does not return in the sequel, it's safe to say Ben Willis is dead.In the original script Ben had an extra line of dialogue he said "I'll always be with you Julie" whilst falling into the grave, also, the dirt around the grave caved in burying him, this kind of implies that he would have returned for I'll Always Know What You Did Last Summer. You can see the dialogue in the films screenplay published by Archways Paperback in pocket book form. There are other tiny omissions in the screenplay as well.
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