Had Ultimecia manage to complete her own time compression fully, she can finally possess her ability of sending certain objects into a dimension for eternity. I don't believe that this particular dimension will take place on the VIII world (the original landscapes) but rather somewhere else, like a desert island for example. Well, that did happen to Squall at the end but that was part of the time decompression (reversing Ultimecia's actions.) This is proof that the concept of a dimension exists in VIII.
Ok, the main characters are Squall, Quistis, Rinoa, Selphie, Zell and Irvine. That's six characters. How many sides does a cube have? Six. The six characters are merged as a dimension:
Top floor: Squall
Bottom floor: Rinoa
Left wall: Quistis
Right wall: Zell
Front wall: Selphie
Back wall: Irvine
If one of the sides is broken, the whole dimension will become useless. That's why Laguna told the dimension to take care of each side. How? Friendship. If each side thinks of each other and support each other, then the sides will stick each other; a strong and unbreakable dimension. It's only breakable when Ultimecia completes her TC. Because with Ultimecia's ability, she can basically move this dimension (the party) into another dimension forever.
Laguna is not who you think he is, he's just like Odine. Because what Laguna said has proven to be true at the end. Time decompression messes up everything. Squall's side losts his place in the dimension and that's why he ended up on a desert island.
As for the propagators manifestation...
This explains why Squall and Rinoa encountered the Propagators at the Ragnarok in the space.
After what Ultimecia's influence has done to the VIII world and Rinoa being given some evil power earlier (GG scene). Then, they travelled to the space, which is faster than speed of light. Why wouldn't this cause some sort of impact?
With the impact in mind, when Rinoa is lost in Space and Squall out looking for her, at that point, they were only thinking of each other. That's not good for the dimension. So, the two sides (Rinoa and Squall) get removed from the whole dimension. Something bad happens...
Ok, there are eight propagators at the Ragnarok:
Purple Propagator x 2 (One for Squall and another for Rinoa)
Red Propagator x 2 (One for Squall and another for Rinoa)
Green Propagator x 2 (One for Squall and another for Rinoa)
Yellow Propagator x 2 (One for Squall and another for Rinoa)
Basically, Rinoa's power made it possible that the impact manifested the propagators.
Oh, have you noticed how many letters does Ragnarok have? Eight! Yet there are eight propagators in it. Was this supposed to happen? Did someone name the ship Ragnarok because of what will happen in the future?