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The 3rd legendary uses the power of others desires to manifest itself. The time loop is based around the AI entering the machine and going back to meet Heath and deliver information to add to the paradox book. The 'dream' he mentions is the wormhole/exit point where the time machine drops the AI at the bottom of Area Zero.
The DLC will focus on Heath and the original contents of his copy of the paradox book. You will meet the 3rd legendary and it will create past suicune/future verizion by pulling them from their 'time period'.