There is no way to automatically repair the world after it was opened in a wrong version. What happens in such case is the game loads the world and encounters blocks unknown to it, so it replaces all of them with Air. If the world is then saved, the information about deleted blocks is lost forever.
As you have a somewhat-relevant backup, your best course of action will probably be to open both worlds in a map editor (the only one I know of is MCEdit, but there are probably others) and selectively copy parts of the damaged world into your backup. Just see which version of each building is better - the damaged one or the unfinished one from the backup.
The reason for using backup world as a base, as mentioned by @dly, is that versions between 1.3 and 1.8 have introduced tons of changes to terrain generation, and not only your structures are now damaged, but the whole terrain, probably including underlying biome data.
Here's a short list of all naturally generated things added since 1.3 to scare you a bit :-) All these things now leave a hole in your world (or at least revert to more generic blocks).
- Flower Pots, Nether Quarz Ore, Trapped Chests, Horse Armor, Name Tags, Hardened Clay, Horses, dozens of new biomes, two Wood types and their derivatives, Podzol, Packed Ice, Coarse Dirt, Red Sand, Red Sandstone, several flowers and plants, Andesite, Granite, Diorite, Ocean Monuments. And Spawners are now probably broken due to different data format.
After copying your damaged structures to your backup, if your game was survival, you may also opt to using creative mode or MCEdit to manually repair remaining damage.
You are not missing anything obvious.
The Spirit World, aka Dreamworld, in Witchery simply mirrors the generation of the Overworld. The Spirit World exists primarily to get materials that only generate there, and items that can only be crafted there, i.e. Wispy Cotton, Disturbed Cotton, Brews of Flowing Spirit, etc. Because of Witchery's nature emphasis, crafting most of these items are not that difficult, some iron is required to build a kettle. The Spirit World does not seem to have been designed to play permanently in. As you pointed out: it is difficult to get enderpearls. This is because "Endermen cannot enter the Spirit World."
TL;DR The Spirit World is designed as a challenging way to get top tier ingredients in the Witchery mod. It is not meant to be the primary world of play.
Sources:
Playing with the Witchery Mod previously
https://sites.google.com/site/witcherymod/spirit-world
Best Answer
Unfortunately, once a world is corrupted, you usually cannot get it back, because the missing parts aren't just not shown, the information in them is completely gone.
Next time you want to switch to an older version, you should probably save a copy of the world in case the world gets corrupted. In general, downgrading is never officially supported, not even just starting an older version in the same directory as a newer version.