I remember trying to convince my friends in high school that it was Rinoa who had died. That shot of her space suit shattering? Highly significant. Alot of people - including this guy - ignore it. I think that she died in space - Squall never reached her. He is a complete failure at saving the one thing he cares most about. The rest of the game after this point is some sort of sick denial by Squall that she is really gone. There are some scenes after this where it appears as if no one else seems to notice Rinoa except him. (Sorry, I don't remember the specific scenes, it's been a while). I know there are holes in that part, but that was traumatic for him, and he is just oozing denial - perhaps to the point of hallucinations. Or maybe it's Ultimecia playing with his mind. Who knows. The whole mind **** with the blurring Rinoa is him realizing that she is dead, with the shattered helmet at the end finally confirming it for him.
After the final boss, the characters are all running through the time compression trying to get back to their world. Squall ends up in that desert where he collapses, horrified by the certainty of returning to a world without Rinoa. In this mixed up compressed world where dimensions meet (or something) Dead Rinoa finds Squall (or maybe he's imagining it - it doesn't matter) and he dies with the conscious choice of giving his existence so that she can return to the real world. (Don't say that if he died and kept her dead they would be together forever. There's no heaven in Final Fantasy, only Lifestream). Also, this rights his wrong from when he failed to save her in space.
Everyone escapes the compression, with Rinoa returning instead of Squall. He is nowhere to be seen in the home video at the end. However, we see Rinoa point to a shooting star. So she exists.
Rinoa is on the balcony. Alone. Seriously, watch it and tell me shes not alone. Unless Squall is purposely squeezed in the corner against the wall over her right shoulder, she is alone. And don't tell me it was an artistic choice to reveal him like that. He's not there. She points to a star, and suddenly Squall is there kissing her. We know from the home video segment that he didn't walk up a second before the point. He's not really there - she's imagining it. He ultimate fantasy. It's quite a bittersweet ending.
I think that this all fits the expressed theme of the game - Love. Squall makes the ultimate sacrifice, a selfless act that he would have been out of character before Rinoa came into his life. She had a profound impact on him, and, if anything, his sacrifice teaches us that it is better to have loved and lost (and died), than never to have loved at all (so cliche).