Would it dilate for either observer, though? If the purpose of it is to just fold space time in essence shrinking the distance traveled I dont think we would see any significant time dilation occur for either point of reference as in that hypothetical scenario you would be using the fold in space time produced by such a drive to make two points in space closer together so in theory you never travel significantly close to the speed of light and time should flow pretty much "normally" for both points of reference. What I do wonder is would anything that gets touched by the horizon of that bubble/wave be effected, and such a drive would have to cause massive gravitational waves like a boat that moves through the ocean, what would be the effects from such a drive functioning in that manor be to anything near it or that it touches. And I'll state I'm in no means a physicist by any means so I could be completely of the mark here any many ways lol