Sleeping would suck ass
You could make it so that sleeping instantly transports you to the dawn… though that wouldn’t work at all with multiplayer unless you want both players to pass out at the same time.
The simplest and probably the best solution is to make it real-time. I think that could work fairly well, although it wouldn’t be the same game any more, but that I guess is the point in some way. There would need to be more specific missions, like kill everyone, or collect, or build something at some given period of time, maybe capture the flag and stuff like that. Working co-operatively with other human players, everyone for himself, or teams competing with other teams. Whether that would be better, worse, or just different than normal cataclysm is up for everyone to decide for themselves after they actually try it.
But there are some things we can tell in advance. You would need to be much more organized with your inventory as you wouldn’t have time to fiddle with it when the danger is near. It would be harder in many ways, the question is only would that make it more interesting, or at least interesting enough to justify the effort of making it.
I suppose I could fairly easy mod single player game Cataclysm to play in real-time, that is monsters would move at regular time intervals regardless of what are you doing or not doing. That would possibly give us pretty good picture of how fun or not fun real-time multiplayer Cataclysm could be.