I think Square may have meant to use this story of R=U but decided against it in the end but still left all the points hidden in the game. Ultimecias castle being located right were Rinoa and Squall promised to meet...
The game shows us why her castle was there, though: To slaughter the SeeDs. Squall and the others find their dead bodies strewn across the beach behind Edea's Orphanage. Ultimecia likely decided to wipe out her foes before casting Time Compression to settle a grudge.