I think Spoony said it best as to why the Squall is Dead theory honestly makes the story worse. Since if the theory is canon only the events first disc actually happened, then story ends with Squall dying without having accomplished anything. Maybe if the whole point of the story was finding out whether it's reality or not (like in Total Recall) it would make sense, but here it just comes off as another tacky, half-assed, ultimately meaningless idea thrown on the pile with no real depth or weight to it.