ANSWER - There is a saying in the Christian religion that I am particularly fond of – “The gifts of the spirit are recognised by their fruits.” This roughly translates that you can see the hand of God in things where the outcome is positive. Equally however this could be applied to negative forces – we can guess at malevolence when the outcome is negative.
The interesting thing in the case you present here is that there do not seem to be any consequences. The only repercussion of the event seems to be the nightmares you mention and it is quite natural for a distressing event to cause nightmares for those involved.
My point really being that I doubt this has much to do with witchcraft. Had it been a craft focused ritual it would have had a specific purpose and I think the consequences of said ritual would have become evident. The children appear not to have been harmed in any way, there are no major life changes you mention occurring after the tying up. I think a formal ritual completed by three people (presuming they knew what they were doing) would have achieved something. The fact that it didn’t suggests to me that is wasn’t connected with magic or the occult.
The robes could have been native American – I’m afraid my knowledge of Native American magic is not very extensive – but most magical traditions involve formal dress and all long robes do bear some resemblance to one another. Not impossible to see this as a Wiccan or perhaps a Hoodoo blessing on the children or even a Native American tradition I am not aware of. What I will do, when I post this, is ask our 11,000 strong Facebook crowd if anyone has any particular knowledge and understanding of traditions in this area and whether they can help to shed any more light on this for you.
A couple more things though. You mention that they have discussed this with the stepmother. How did she react? If somebody told me I had been involved in something like this I would be extremely curious and want to know more. I’d be very suspicious she is hiding something if she has just dismissed the whole thing without asking any questions…
I would also consider the possibility that the event did not take place in real time and was in fact a dream shared by the two of them. If this was the case then there may have been a trigger (a scary tv programme etc) that caused one of them to go into the dream cycle of the other. This would explain why the stepmother is unaware of the event.