I don't think Squall is dead. Cause in the end, they show us both Rinoa and Squall kissing each other. So? Is Rinoa kissing with a ghost?
Anyway, I couldn't understand one thing: When Squall exit from nothingless and enter his chilhood times, (you know, Matron and little Squall is playing and suddenly weak Ultimecia tries to pass her power to Matron), how'd she still survives in that time??