The existence of the bottom oil–water transition zone (BTZ) greatly impairs the performance of the conventional steam-assisted gravity drainage (SAGD) process and its mitigation measures are very limited. In order to accelerate oil production and decrease the Steam-to-Oil Ratio (SOR), a promising technology involving a steam drive and gravity drainage (SDGD) process by placing dual-horizontal wells with high permeability in the BTZ was systematically studied. This paper conducted two-dimensional (2D) and three-dimensional (3D) physical simulations as well as 2D numerical simulation of the SDGD process to explore the mechanism, potential, and application conditions. The research findings indicate that the SDGD process in the BTZ with enhanced permeability through dilation stimulation can achieve higher oil production and lower SOR than the SAGD process. This process fully leverages the advantage of the BTZ to quickly establish inter-well thermal and hydraulic connectivity. The steam chamber first forms around the injector and then spreads towards the producer. By exerting the horizontal displacement of drained oil, oil production rapidly ramps up and keeps at a high rate under the synergistic effect of steam drive and gravity drainage. These insights enhance our understanding of the mechanism, potential, and application conditions of the SDGD process in the confined BTZ to develop super heavy oil or oil sands.