There's no confirmation but that's exactly what the evidence we can see suggests is happening. That's why I bring it up when people say "They shouldn't have changed it so Biggs/Zack survived, it's important to the story they don't" because it seems very likely that they didn't bring them back to life.
One idea that I saw earlier was that in part 2 you'll be switching between these timelines through the game, the 'original game' story and the 'Zack lives' story, and each group would be hunting down Sephiroth in their own way. Something like that could be really cool if done well.



					
						

					
					
					
						
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