I really like the concept of this game, but the gameplay is rather tricky. I found it very difficult to gauge distances from a first person view. The best strategy I found was waiting on the start platform for a nearby high sheep, run into that, and then hope that there was a conveniently placed sheep halfway that I managed to maneuver to.
But I don't think that strategy got me passed level 3, and unfortunately I think the game resets you back to level 1 every time you lose. Plus, I find that you're basically screwed if you miss a sheep while you're still moving up or only slightly down. Once you descend a little, there's no real way to get back up that I found. Even if I hit a sheep while below the target platform, that generally only slows my descend a little, I had no chance to get back up. It isn't real physics, but since this is a dream, maybe make the speed at which you're bounced back up higher the lower you are. That way, you can actually come back from missing a sheep at the start of your jump.
Edit: Okay, I played some more and I have on occasion been able to bounce back after falling deeply. I will say that the inability to look around does still make it a bit RNG-ish if you can hit more sheep on your way up, as they are in your blind spot. Also, I noticed that the number of sheep on the other platform show what level you are on, and that it doesn't reset. I did actually finish the game.
Also, while I loved the both the black-spot particle effect (do you happen to have a link to the project or a screenshot of the settings? I might like to implement something similar in my future games) and the sight of sinking ever deeper in the black nightmare, it took rather long to complete my fall and reset the game. Maybe speed that up by a factor of 2 or 3, given how often you die. (Well, how often I died anyway).