In order to create a Tier 10 Arduanatt, you need both a male and female Tier 9 Arduanatt. Both horses must be level 30, but their skills and and stats do not matter.
Once you have both horses, take them to Stonetail Ranch. You then need a new item called Incense Burner to call Dreams. This is created using Processing (L), Manufacture and the recipe below:
Once you have created the Incense Burner to call Dreams and both of your horses are at Stonetail Ranch stable, go to Gula the Stable Keeper to attempt a “dream”.
There is a fixed success rate of 3%, this means that if you fail you do not get failstacks to increase the chance.
If the dream process fails, the materials are consumed but both of the horses will be returned to you.
If the dream process is sucessful, you will exchange both horses for a new Tier 10 Dreamy Arduanatt which will be level 1.