Hey Paul,
Well, it has been confirmed. You have to have HALion Sonic for Hypnotic Dance to work at all and HALion Sonic is only available in Cubase 6 or higher.
I’m bummed about missing out on the instrument and I even suggested to the tech support that they update the product page and make it explicit that Hypnotic Dance will not work in Cubase 5.x. As it stands right now, the product page says it will work in a “VST 3 or VST 2 compatible host application for using as plug-in,” which is obviously misleading and incorrect.
Anyway, thanks for the back and forth on this and good luck with your music!
-Gunnar