Beauty is in the eye of the beholder, and just because you think a woman is ugly doesn’t mean she doesn’t have sex appeal and charisma. In fact lots of beautiful women are cheated on and left for less beautiful woman all the time. Attraction is what makes someone beautiful and it sounds like your boyfriend and this woman you think is ugly have an attraction.
In fact your dream is probably your subconscious helping you understand what’s been bother you about your boyfriend and this woman: whether or not he’s cheating on you, he’s attracted to her.
Since you’ve admitted cheating on him, it sounds like this relationship is going to be one where cheating and looking elsewhere for sparks is the norm.
A boyfriend should make you feel special and desired. If he doesn’t, it may be time for a new boyfriend!