FormerlyHemlock
Hero
It's really not a good idea. If they don't get long rests they'll accrue levels of exhaustion which will only make things worse. If you want to keep players on their toes make it happen if they roll a 1 on a die of your choice, unmodifiable by racial or class abilities.
There's precedent in 5E with the Dream spell, which also prevents long rests for non-elves. (Goes well with Geas BTW. Geas + Dream = dead traitor eventually.)
I don't think I'd start giving PCs nightmares immediately though. I'm letting my PCs rest freely at the moment, but maybe there will come a point in the future when Orcus or Zuggtmoy advance their plants to a certain stage, and then I will give (DC 10ish) nightmares to everybody in the Underdark including the PCs, both to increase the dramatic tension and force the pace a bit.