In the fact that Tifa remembers all this happening, and when Cloud's memories get sorted out in the life stream. We know Nibelheim burned down. That's stated even by Shin Ra agents working in town (the letter is in Tifa's room). Hojo's notes can be found in the basement of the ShinRa mansion. The game states outright that all of this happened, and that Cloud was merely confused in his role. It happened, and we see the right version of events after Cloud is himself again.