If I have dreamlands fanatic in play and my opponent plays huang han can I just pick pick up the dreamlands fanatic and replay him immediately? Why or why not?

Yes. You can bring fanatic to hand and then respond to opponents character getting out of play and put him into play again. Effectively getting immunity to Huang. It was mentioned in some threads about ST bouncing i think.

As to why… because of timing structure. Response is after the effect and hes in your hand when response can be triggered.

PS ST character Rich Widow has similar "power".

 where at in the rules does it talk about timing. i need to get a better grasp of the rules. im still confused because it seems to me like they both go into hand at the same time.

 You have to go to the FAQ to get the detailed timing structure.

 1. Action is initiated.

 As an Initiate lover… unfortunately this works. Dreamland Fanatic's response can be triggered after a character goes back to your opponent's hand. Because that's the whole purpose of the Initiate… if someone triggers his response, DF's response triggers in return. I hate those and Rich Widows…

Yes, it works.  Another reason why I feel like you shouldn't over-rely on Initiate if you play Silver Twilight.