Oh man, I was gonna keep my mouth shut but rubah's point should be backed up.

Yes, the game clearly states that Ulty is the only one who could exist in a time compressed world. No one else, including Rinoa, Squall, anyone - would survive the completion of Time Compression. Therefore, I've always said that since the compression threatens Rinoa's life just as much as anybody else's she cannont be Ulty.
1)Being Ulty would allow her to survive the spell, meaning both she and Ulty would survive, and what would they do then? Sit around and play pong?
2)The bigger point, why would Ulty try to destroy her past self, over and over again?

As I see it, the only reason Ulty would want to create such a place is that for whatever reason, she can't exist in the "normal" world - only the time compressed one, which is why she keeps going through all this trouble to create it - then fails, dies, and is born and tries again. Just my 2 cents.

Oh, and I read that fanfic - I don't get it. It makes no sense to me.