More Jungian than Freudian.
Captain Gregg is the personification of what Jung called the Animus: the complementary, masculine aspect of the inner personality of a woman. Both Lucy Muir and her daughter Anna "see" him, (day)dream him, because he is part of the collective unconscious. He is an archetype, and that's why he is so stereotypical, old fashioned and unvarnished.
But not only does he symbolize archetypically masculine power, which enables Lucy Muir to be a strong and independent woman. As Lucy Muir's Animus he also functions as a helpful guide, giving advice in her career and love life, if only she were willing to listen to him (him: as in that aspect of herself).
So, sure he is "real"... he exists in the subconscious, which is symbolized by the sea. Hence he is a seaman. By pointing the telescope to the sea, Lucy Muir is able to look into her subconscious and come up with a successful book, containing experiences which lie way beyond her conscious life and the inhibitions of her upbringing. After finishing the book she says: "I've never understood the sea before." In other words, she was never attuned to her subconscious.
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