Hi Christine -
Freud would have clucked and filed this dream under “penis envy,” though I don’t think we have to go that far in our analysis. Heck, let’s just call your dream desires for what they are - sexual curiosity - which is about as natural as the sun coming up tomorrow morning.
Your dream reflects a logical sequence of thoughts beneath its manifest content. You were dreaming about sex in an exploratory context (masturbation) when your curiosity about “what it would be like to have a penis” popped into your mind. As is common in dreams though, your dream did not suddenly depict yourself with a penis. Rather, it was your sister who suddenly called you into the next room -to show you her penis.
The question you raise is: why your sister, and why not yourself? There are two likely answers to your question. Either it would have been too unbelievable - in the dream - for yourself to have a penis (you would have recognized that you were dreaming), or your sister had the penis because a part of you objects to the fantasy of yourself having a penis. In this latter “disguised wish” scenario, your sister is serving as a convenient substitute for your own curiosities. And who, after all, could be closer to you than your very own sister?
I think the key insight you lend us into the dream is that “I might even have been a tiny bit jealous that she had this new toy to play with, though it was only a tiny bit of jealousy, because she now didn’t have her female organs.” Your view of her penis as a “toy” that she could play with suggests a “playful” curiosity more than anything else. You also are clearly not in any hurry to lose your own, female, organs - which indicates your contentment with your own sexuality.
Anyone who hasn’t wondered what it must be like to be a member of the opposite sex - sex and all - must not be very curious, or sympathetic. After all, the better we understand each other, the better couples we can be.