The object palette in Dream Maker is doing some strange stuff. When you click on a node in the object tree, it adds that object to the object palette. This is undesired. The object palette should not be adding stuff that's not actually been placed on the map, I don't think.
Second, the object palette doesn't update the instances based on compiler changes properly.
If I create an object like so:
obj/testing
icon = 'testicon.dmi'
icon_state = "test"
Compile, and add it to the object palette by clicking on the object in the object tree, it adds the current state of the object to the object tree.
But then if I change the icon_state, compile, and go back into the map editor, the object tree still shows the object's old icon_state. This is problematic. I would expect that the object palette would update its information.
Moreover, the object palette just adds whatever into itself, seemingly regardless of what I want. I don't think I understand how this part of the tool works, and it doesn't feel like it's actually been well thought out to be a useful change to the engine.
I DMed you a test case for this and other problems.