OK, so as they travelled back to the nearest town, I had the half-orc and dwarf dream about a figure following them. During the day, they kept feeling like something was behind them but they couldn't see anything. Then, while they were resting, they spotted something on a hill. Then it was closer. And then it was on the dwarf! Unfortunately, the dwarf chose to dodge, making it hard for the revenant to hit him. After several rounds of it missing or landing one hit, while everyone else pinged away at it from range, I decided to have it try using its Vengeful Glare, but the dwarf made his Wisdom save not once but twice.
I also completely forgot about its regeneration - I guess that'll kick in next time.
They cut off the revenant's head and then burned everything. I then let them have one night without any dreams (since it says it takes the revenant 24 hours to find a new body). This really freaked them out. Enough that the dwarf, who'd sworn that he'd never drink alcohol again because of something that had happened in the past, went straight to the pub and started drinking as soon as they got back to town.
I'm going to give them a bit of a reprieve when they're back in their home town. I'll tell them that the dreams ease up and they just have this sort of vague feeling that the creature is still out there, waiting for them. Then it'll catch up to them at the beginning of the next adventure, when they're out on the road.