Is it permissible to supplicate for the deceased with: "O Allah, You know that had he been my guest, I would have honored him, and now he is Your guest, so honor him, O Most Generous of the generous," based on a dream?

Supplicating for the deceased is permissible with any wording that indicates mercy, seeking forgiveness, and asking for good for them. There is no specific supplication that must be made, though it is preferable to supplicate with reported (ma'thur) prayers, such as: "O Allah, so-and-so, son of so-and-so, is in Your care and under Your protection, so protect him from the trial of the grave and the torment of the Fire. You are the Lord of faithfulness and truth. O Allah, forgive him and have mercy on him, for You are the Forgiving, the Merciful." Or: "O Allah, forgive him and have mercy on him, pardon him and be gracious to him, make his entry [to the grave] honorable, and widen his entrance. Wash him with water, snow, and hail, and cleanse him from sins as You cleanse a white garment from impurity. Grant him a home better than his home, a family better than his family, and a spouse better than his spouse. Admit him into Paradise and protect him from the torment of the grave and the torment of the Fire." The intent is sincere supplication for the deceased, so any supplication that achieves this is acceptable.