LO isn't "off" the timeline, it IS the timeline. Put another way, it takes precedence now.

Nomura, Nojima, etc. gave it the go ahead and were active in its making, and as such, it clarifies and retcons those portions of the game we saw (which we only saw as memory, meaning if one must rationalize them both, Cloud, in his injured state, misremembered the final moments of the showdown and other more minor details.), making it the 'official' version of those events.