Mugwort is legal and can be useful for dreaming, either as a tea or smoked, or just kept in a sachet in the pillow for the smell. It may produce a waking altered state of consciousness which I would describe as calm, flowing and slightly dreamlike, but is very mild. I should also warn that mugwort contains thujone which could be bad for you if used in very high doses or for extended periods, but in general you will be fine unless you are doing something obviously unnecessary and unwise like drinking cups and cups at a time regularly or smoking far more than you'll find pleasant.
The tea is quite bitter and unpleasant in my opinion, while the smoke is extremely mild, smooth, and almost sweet tasting if the plant is of good quality. An incense would work if you're not comfortable with inhaling directly, but take proper fire precautions if you're planning to sleep with incense.
There are plenty of resources online regarding mugwort consumption and dreams.
You should also consider using essential oils just for their scent. Scents easily reach the sleeping mind so a fragrance you associate with your sleep practices can serve to anchor your mind to your intentions even as your awareness is transformed when your body falls asleep.
It should be noted that a key mechanism of projection and lucid dreaming is the mind's ability to maintain awareness through transitions into altered consciousness. Use of psychoactive substances causes such an altered state in the first place, so if you're not able to succeed naturally there is a good chance that this sort of thing won't work very well, and may actually just complicate your progress if not stop it entirely. I therefore recommend using scents etc. at first, and then consuming only small quantities. With any very psychoactive substances, seek the advice of an experienced user who seems to be healthy and trustworthy.